Oil prices stabilized in Asian trade on Thursday after recording strong gains earlier in the week, fueled by rising geopolitical tensions in Russia and the Middle East, which heightened concerns about potential supply disruptions.
Despite these gains, traders remained cautious due to fears of an oversupplied market, particularly after U.S. data revealed a larger-than-expected build in oil inventories. By 21:33 ET (01:33 GMT), Brent crude for November stood at $67.49 per barrel, while West Texas Intermediate fell slightly to $64.34 per barrel. A weaker U.S. dollar, following lower-than-anticipated producer price index inflation, provided some support to crude prices, with markets now awaiting key U.S. consumer price index data later in the day.
Geopolitical Risks Support Prices
Heightened concerns over supply in Russia and the Middle East helped underpin oil prices this week. In Europe, Poland shot down Russian drones over its airspace during a Russian attack in Western Ukraine, marking the first instance of NATO forces engaging directly in the conflict. While the move raised fears of wider escalation, Moscow stated the incursion was unintentional and expressed willingness to discuss the matter with Poland.
In the Middle East, Israel conducted airstrikes on Hamas targets in Doha, Qatar, a U.S. ally, potentially complicating ongoing peace talks. The attacks signaled likely continued hostilities in Gaza, which initially pushed oil prices up by 2% before trimming some of the gains. Additional support came from expectations of stricter U.S. sanctions on Russian oil, with President Donald Trump reportedly advocating trade tariffs against top Russian crude buyers India and China.
OPEC+ also contributed to price strength, announcing a smaller-than-expected production increase for October, signaling tighter oil markets than traders had anticipated.
U.S. Inventories and Oversupply Concerns Cap Gains
Nevertheless, persistent worries about a global oil surplus limited further gains. Russia and China have been expanding energy trade, and India has shown little intention to reduce purchases of Russian crude. U.S. fuel demand appeared to be cooling as the summer season ended. Data released Wednesday indicated U.S. oil inventories rose by 3.93 million barrels in the week to September 5, against expectations of a 1.9 million barrel draw. Distillate and gasoline stocks also increased sharply, suggesting weaker demand in the world’s largest fuel-consuming nation following the travel-heavy summer.
U.S. production remained robust in recent months, adding further pressure on global supply and contributing to a more cautious outlook for oil markets.
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