Crude oil prices climbed slightly on Wednesday as traders weighed tighter global supply against persistent fears of weakening demand from major economies.
Brent crude futures advanced by about thirty cents to trade near seventy nine dollars per barrel while West Texas Intermediate was up roughly twenty cents around seventy six dollars.
The uptick was driven by reports of a disruption in Russian fuel exports following infrastructure damage linked to escalating Ukraine conflict activity.
Analysts say any sustained outage from a major exporter could tighten balances in the second half of the year, lending support to prices.
At the same time an industry report showed United States crude inventories fell by almost four million barrels last week, signalling steady fuel consumption despite high interest rates that have begun to dampen some sectors of the economy.
However worries linger about future consumption trends after China released softer than expected factory data, suggesting the world’s top crude importer is struggling to regain post pandemic momentum.
Economic indicators out of Europe also hinted at stagnating industrial output which could temper oil demand later this year.
Investors are watching closely for the outcome of the upcoming policy meeting of producers from the Organisation of the Petroleum Exporting Countries and its partners who have maintained voluntary supply cuts in a bid to keep prices supported.
Market analysts note that while Brent remains comfortably above the seventy five dollar floor set by Saudi Arabia the upside appears capped by concerns over a wider global slowdown.
Hedge funds and other speculative traders have also trimmed their bullish positions as price growth has moderated in recent sessions.
For import reliant countries the current levels offer only modest relief from the high energy costs seen earlier in the year although any sudden supply shock could push prices sharply higher.
Market participants are now focused on upcoming United States inflation data and potential changes in interest rate outlooks which could shift sentiment in either direction.
Written By Ian Maleve
