Singapore, Aug. 28, 2024 – Oil was little changed on Wednesday after a sharp drop in the previous session ended a three-day streak of gains, amid persistent concerns over potential supply losses from the Middle East and North Africa as well as global fuel demand worries.
Brent crude futures were up 8 cents at $79.63 a barrel at 0653 GMT. U.S. West Texas Intermediate crude futures up 7 cents to trade at $75.60.
Prices fell more than 2% on Tuesday, snapping a three-day streak of gains of more than 7%, as concerns about low refinery profit margins weighed on expectations for fuel demand amid data showing global consumption growth has been lower than forecasts.
While a decline in U.S. oil and fuel inventories last week supported prices, the potential loss of Libyan oil output and the possible expansion of the Israel-Gaza conflict to include Iranian-backed militants from Hezbollah in Lebanon remain the largest risks to oil markets.
“Geopolitical risks continue to hover over the market,” analysts at ANZ said in a note on Wednesday.
Several oilfields across Libya have halted output as closures spread, amid a dispute between rival government factions over control of the central bank and oil revenue.
The dispute puts about 1.2 million barrels per day of production at risk.
There has still been no confirmation of any closures from the Tripoli-based government, or from the National Oil Corp (NOC), which is in charge of oil resources.
However, engineers at the southeastern Amal and Nafoora oilfields told Reuters production had been halted, while engineers at Abu Attifel, also in the east, said output was reduced.
In the Middle East, fighting continued in the Gaza Strip between Israel and Hamas militants, displacing Palestinians while there were few signs of a concrete breakthrough in ceasefire talks in Cairo.
Over the weekend, Israel and Hezbollah bombarded each other with rockets and missiles across the Lebanese border.
“The exchange of fire between Israel and Hezbollah threatens to derail negotiations over a ceasefire. While both parties have said they have concluded military operations for now, the market is still wary of an outbreak,” ANZ said.
U.S. crude oil inventories fell 3.407 million barrels in the week ended Aug. 23 last week, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by 1.863 million barrels, and distillates fell by 1.405 million barrels.
Later on Wednesday, weekly U.S. oil storage data is due from the U.S. Energy Information Administration (EIA). (Reuters)
