Oil prices rise after steep losses; large US inventory limits Investing.com’s recovery

Investing.com– Oil prices rose in Asian trade on Wednesday, clawing back some of the previous session’s steep losses, although signs of an excessive build in U.S. inventories capped gains.

Oil prices fell more than 4 percent on Tuesday after reports that the Lebanese military group Hezbollah sought a ceasefire with Israel, pointing to a potential escalation in the Middle East conflict.

Dwindling optimism over new stimulus measures from China, the main oil importer, also weighed on after authorities declined to introduce stronger fiscal stimulus measures to shore up slowing growth.

U.S. crude that expires in December was up 0.6 percent at $77.63 a barrel, while it was up 0.6 percent at $73.40 a barrel by 9:14 p.m. ET (01:14 GMT ).

API data shows protective build-up in US inventories

Capping the recovery in crude oil, data on US oil inventories rose by 10.9 million barrels in the past week, well above expectations for a 1.95mb increase.

The reading typically heralds a similar trend from , due later on Wednesday, and raised some concerns that U.S. fuel demand is cooling, especially as the country’s south-central region grapples with a series of devastating hurricanes.

Traders were watching for possible oil supply disruptions from Hurricane Milton, one of the strongest hurricanes seen in recent history. The Category 5 storm is scheduled to make landfall in Florida this week, but is expected to largely avoid most oil and gas operations in the Gulf of Mexico.

The Middle East conflict is taking center stage amid Hezbollah’s calls for a ceasefire

Oil was pressured by reports that Hezbollah called for a ceasefire as Israel continued to target its top leadership as both sides continued to launch offensives against each other.

However, the prospect of a ceasefire points to a potential de-escalation of the conflict in the Middle East, which has otherwise been a key support point for oil prices.

Oil markets rallied last week after Iran and Hezbollah fired missiles at Israel, raising concerns about a potential escalation in the Israel-Hamas war that could disrupt Middle East oil production.

Traders were still on the edge of Israel’s attack on Iran’s oil facilities, which could mark a serious escalation in the war.