DRC Leadership Announcement:
Oil prices rebounded slightly in early Asian trade on Wednesday as investors considered concerns about output cuts by critical producers and attacks on shipping in the Red Sea, contrasting them with reduced expectations of U.S. rate cuts.
Brent crude futures rose by 0.15% to $82.46 a barrel, while U.S. West Texas Intermediate crude futures (WTI) increased by 0.12% to $77.13. Brent and WTI contracts experienced a 1.5% and 1.4% drop, respectively, on Tuesday. In geopolitical news, Washington once again vetoed a United Nations Security Council resolution on the Israel-Hamas conflict, rejecting a call for an immediate humanitarian ceasefire.
The U.S. is instead advocating for a resolution linking a ceasefire to the release of Israeli hostages by Hamas. Meanwhile, ongoing attacks on vessels in the Red Sea and Bab al-Mandab strait by Yemen’s Iran-aligned Houthis raised concerns over freight flows through the critical waterway. Despite a decline in oil refining, Russia announced its intention to meet its OPEC+ quota in February, involving output cuts of 500,000 barrels per day. Russia’s energy minister noted a 7% decrease in refinery throughput since the beginning of the year due to Ukrainian drone attacks.
The oil market also grapples with concerns that Federal Reserve rate cuts may be delayed, impacting the outlook for oil demand. U.S. inflation data last week pushed back expectations for an imminent start to the Fed’s easing cycle, with economists now predicting a cut in June. Preliminary Reuters polling indicated an expected increase in U.S. crude inventories last week, while distillates and gasoline stockpiles were anticipated to decline.
The situation in the oil market remains dynamic, influenced by geopolitical events, production decisions, and economic factors, contributing to price volatility.
