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Oil prices stabilized on Wednesday as OPEC+ production cuts and ongoing uncertainty in the Middle East balanced out a weakening demand outlook and expectations of ample supply in 2024.
Brent crude oil futures inched up by 16 cents (0.2%) to $74.41 a barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped by 19 cents (0.3%) to $70.39 a barrel. This followed a significant drop of over 4% on Tuesday, triggered by easing fears of supply disruptions after reports suggested Israel would not target Iranian oil and nuclear sites amid the ongoing conflict.
Despite this, concerns about potential escalations between Israel and the Iran-backed Hezbollah militant group remain, adding an element of geopolitical risk that continues to underpin oil prices.
OPEC+ Cuts in Focus, Demand Outlook Weakens
OPEC+ production cuts are set to stay in place until December, after which some members are expected to ease their current restrictions. However, on the demand side, both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) downgraded their 2024 global oil demand growth forecasts this week, citing a significant slowdown in China’s economy as a primary factor.
China’s efforts to boost its sagging economy, including potential plans to raise $850 billion from special treasury bonds over the next three years, have so far failed to provide substantial support to oil prices.
U.S. Oil Inventory Data Expected
Looking ahead, market participants are watching for U.S. oil inventory data, with reports from the American Petroleum Institute due on Wednesday, followed by official government figures on Thursday. Analysts expect crude stockpiles to have risen by about 1.8 million barrels in the week ending October 11. These reports, delayed by a federal holiday, could further influence price movements later this week.
