Oil rises amid Red Sea attacks and weak US interest rate cut expectations

Oil prices regained some of their gains in early Asian trading on Wednesday, as investors balanced fears of major producers reducing production and attacks on cargo ships in the Red Sea with weak expectations for a cut in US interest rates.

Brent crude futures rose 12 cents, or 0.15 percent, to $82.46 per barrel by 0100 GMT, while US West Texas Intermediate crude futures rose nine cents, or 0.12 percent, to $77.13.

Brent contracts fell 1.5 percent and West Texas Intermediate contracts fell 1.4 percent on Tuesday.

Washington again used its veto power on Tuesday against a draft resolution in the UN Security Council on the war between Israel and Hamas, blocking the demand for an immediate ceasefire on humanitarian grounds. Instead, the United States is seeking to push the Security Council to adopt a resolution linking the ceasefire to the release of Israeli hostages held by Hamas.

Attacks by Yemen’s allied Houthis on ships in the Red Sea and Bab al-Mandab Strait have continued to raise concerns about shipping flows through the vital waterway. Drone and missile attacks have hit at least four ships since Friday.

Meanwhile, Russia said on Tuesday that it intends to meet its quota for the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, in February despite a decline in oil refining. It had pledged to reduce production by 500,000 barrels per day as part of the OPEC+ cuts package.

The Russian Energy Minister said on Tuesday that the production of refineries in Russia has decreased by seven percent since the beginning of the year, after the facilities were damaged by Ukrainian drone attacks.

Concerns that the Federal Reserve (US central bank) will take longer to lower interest rates than expected have affected oil demand expectations.

US inflation data last week dampened expectations of an imminent start to a monetary easing cycle in the United States, with economists polled by Reuters now expecting a cut in borrowing costs in June.

A preliminary poll conducted by Reuters on Tuesday showed that US crude inventories rose last week, while distillate and gasoline inventories fell.

Analysts polled by Reuters estimated that crude inventories rose by about 4.3 million barrels in the week ending February 16.