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Oil prices remained largely unchanged on Wednesday, following a significant drop in the previous session that ended a three-day streak of gains. This stability comes amid ongoing concerns about potential supply disruptions from the Middle East and North Africa, as well as lingering worries about global fuel demand.
Brent and WTI Prices Stabilize
Brent crude futures rose by 8 cents to $79.63 per barrel, while U.S. West Texas Intermediate (WTI) crude futures inched up 7 cents to $75.60 per barrel by 0653 GMT. The modest increase follows a more than 2% drop on Tuesday, which interrupted a rally that had seen prices surge by over 7% in just three days. The decline was primarily driven by concerns over low refinery profit margins, which dampened expectations for fuel demand amid data showing that global consumption growth has been weaker than anticipated.
Supply Risks Loom Large
Despite the recent price dip, the oil market remains on edge due to potential supply disruptions in key regions. In Libya, several oilfields have halted production as a power struggle between rival government factions over control of the central bank and oil revenues intensifies. The ongoing dispute threatens to take about 1.2 million barrels per day of Libyan production offline. While the Tripoli-based government and the National Oil Corporation (NOC) have yet to confirm any shutdowns, reports from engineers at the Amal and Nafoora oilfields indicate that production has indeed been halted, with reduced output at the Abu Attifel field.
In the Middle East, the conflict between Israel and Hamas continues to pose a significant risk to regional stability. Over the weekend, the conflict threatened to expand as Israel and Hezbollah exchanged rocket and missile fire across the Lebanese border. The situation remains volatile, with ceasefire talks in Cairo making little progress, further raising concerns about potential disruptions to oil supplies from the region.
U.S. Inventory Data Offers Mixed Signals
Adding to the complex market dynamics, U.S. crude oil inventories fell by 3.407 million barrels in the week ending August 23, according to figures from the American Petroleum Institute (API). Gasoline and distillate inventories also declined, by 1.863 million barrels and 1.405 million barrels, respectively. These figures provided some support to oil prices, offsetting some of the bearish sentiment stemming from global demand concerns.
Market participants are now awaiting the release of weekly U.S. oil storage data from the U.S. Energy Information Administration (EIA) later on Wednesday, which could provide further direction for oil prices.
Outlook
As the oil market navigates through a complex landscape of supply risks and demand uncertainties, prices are likely to remain volatile in the near term. The ongoing conflicts in the Middle East and North Africa, coupled with mixed signals from U.S. inventory data, will continue to be key factors influencing market sentiment.
