Oil prices displayed a muted response on Wednesday, caught in a tug-of-war between simmering geopolitical tensions and a surprise increase in US crude oil inventories. While concerns over potential supply disruptions due to conflicts in Europe and the Middle East persisted, a larger-than-expected build in US stockpiles acted as a counterweight, keeping prices relatively stable.
Brent crude futures, the global benchmark for oil prices, edged up slightly by 2 cents to reach $85. 35 per barrel by 03:50 GMT. Conversely, US West Texas Intermediate (WTI) crude futures dipped marginally by 6 cents, settling at $81. 51 per barrel.
Market analysts attributed the lack of a significant price surge to the unexpected rise in US crude oil stockpiles. According to data from the American Petroleum Institute (API), released on Tuesday, US crude inventories increased by 2. 264 million barrels for the week ending June 14th. This figure surpassed analyst expectations, who had predicted a draw of 2. 2 million barrels. The official data from the Energy Information Administration (EIA) is still awaited, scheduled for release later today at 15:00 GMT.
The potential for a global economic slowdown due to rising interest rates also weighed on oil prices. Central banks around the world are raising interest rates to combat inflation, a move that could dampen economic activity and ultimately reduce demand for oil.
Despite the price stability, geopolitical tensions continue to cast a shadow over the oil market. The ongoing war in Ukraine and the recent flare-up in violence between Israel and Palestine raise concerns about potential disruptions to global oil supplies. These conflicts could restrict exports from major oil-producing regions, leading to price spikes in the future.
Looking ahead, market participants will be closely monitoring developments on the geopolitical front, as well as upcoming economic data releases, for clues about the future trajectory of oil prices. The EIA's inventory report later today will be a key indicator of US oil supply and demand dynamics, while any further escalation in global conflicts could trigger a sharp price increase.