WTI (West Texas Intermediate), the U.S. crude oil benchmark, is seeing some selling pressure around $73.35 during Wednesday’s early Asian session. The potential ceasefire between Hezbollah and Israel, along with ongoing concerns about weaker demand from China, could weigh on WTI prices. However, rising geopolitical tensions in the Middle East may limit any significant decline.
The news of a potential Hezbollah-Israel ceasefire has caused investors to ease back on their war-risk bets, as fears of major disruptions to oil supplies in the region have subsided. This has put downward pressure on WTI. Additionally, Israel’s Defense Minister Yoav Gallant is set to meet with U.S. Secretary of Defense Lloyd Austin at the Pentagon to discuss security issues in the Middle East, which could influence the oil market further.
On the flip side, concerns remain about a potential Israeli attack on Iran’s oil infrastructure in retaliation for Tehran’s missile activities. Such a move could push WTI prices higher if it leads to supply concerns.
Meanwhile, U.S. crude oil inventories jumped more than expected last week, with the American Petroleum Institute (API) reporting an increase of 10.9 million barrels, far exceeding the anticipated 1.95 million barrel rise. This sharp increase in supply is also putting downward pressure on oil prices.
Adding to the bearish sentiment is the disappointment in China’s lack of new stimulus measures, which has further fueled worries about reduced demand. China, being the world’s largest crude importer, plays a key role in oil prices, and the absence of economic support has dampened market sentiment. Svetlana Tretyakova, a senior oil market analyst at Rystad Energy, noted, “Ongoing concerns about China’s demand persist due to the lack of stimulus, while the Middle East conflict has not led to any supply disruptions.”