Oil prices rangebound with Middle East tensions, demand signals in focus

Investing.com-- Oil prices moved little in Asian trade on Wednesday as markets continued to fret over a weaker outlook for demand, while fears of supply disruptions from a sustained conflict in the Middle East remained in play.

Focus was on a string of upcoming economic cues from the U.S., Eurozone and Japan, due later this week, for more signals on the world’s largest economies.

Brent oil futures expiring in April rose 0.2% to $82.51 a barrel, while West Texas Intermediate crude futures rose 0.2% to $76.77 a barrel by 20:17 ET (01:17 GMT). 

PMI data, Fed minutes awaited for more demand cues

A pullback in the dollar, before the minutes of the Federal Reserve’s late-January meeting, offered some relief to oil prices.

The minutes are due later on Wednesday, and are expected to offer more insight into the Fed’s plans to trim interest rates this year.

The central bank had largely shot down expectations of early interest rate cuts during the meeting, with the prospect of higher-for-longer U.S. rates presenting some demand headwinds to oil markets, especially as economic growth cools in the coming months.

Focus was also on purchasing managers index (PMI) data for February from several major economies, due on Thursday, for more cues on the potential trajectory of demand. 

The readings come amid growing anxiety over slowing oil demand in 2024, especially after the International Energy Agency lowered its forecast for annual oil demand earlier in February. 

Beyond the PMIs, U.S. inventory data is also due later in the week, following a string of large builds in the country. 

While oil marked some gains over the past two weeks, the rally now appears to have run out of steam. 

Middle East tensions remain in play, US vetoes Gaza ceasefire again

But any major downside in oil prices was largely limited by persistent concerns over the ongoing conflict in the Middle East, which appears to be disrupting some supplies.

The U.S. vetoed a United Nations resolution calling for an immediate ceasefire in Gaza, pointing to little signs of deescalation in the Israel-Hamas war. The veto was Washington's third such move in recent months. 

A string of attacks on vessels in the Red Sea by the Yemeni Houthis also pointed to continued disruptions in shipping activity through the region, which are expected to potentially delay some oil deliveries in Asia and Europe.