Oil prices increased by more than 1% on Wednesday as investors gauged the stability of a ceasefire between Iran and Israel, alongside encouraging data indicating robust demand in the U.S. At 0902 GMT, Brent crude futures rose by 99 cents, or 1.5%, reaching $68.13 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed 94 cents, also 1.5%, to $65.31. This marks a recovery after prices had fallen to their lowest levels since early June, following a surprise attack by Israel on Iranian military and nuclear sites. Giovanni Staunovo, a commodity analyst from UBS, noted that concerns regarding potential disruptions in oil supply have eased. The recent drawdown in U.S. inventories suggests that demand remains resilient, contradicting fears surrounding trade tensions.
Industry reports indicated a decrease of 4.23 million barrels in U.S. crude inventories for the week ending June 20, as mentioned in American Petroleum Institute figures. Moreover, traders are optimistic about the possibility of upcoming interest rate cuts in the U.S. Such measures typically stimulate economic growth and enhance oil demand. OANDA senior market analyst Kelvin Wong pointed out that Federal Reserve Chair Jerome Powell’s recent testimony hinted at a slight chance of bringing forward the first rate cut of 2025 to July, which could provide some support for oil prices.
Geopolitically, a preliminary U.S. intelligence assessment revealed that airstrikes against Iran did not eliminate its nuclear capability. A fragile ceasefire, brokered by former President Trump, appears to be holding, with both nations indicating a cessation of hostilities. Following 12 days of conflict, each side has sought to assert victory as civilian restrictions were lifted. Looking ahead, analysts suggest that oil prices may stabilize around $65-70 per barrel as the market awaits further U.S. macroeconomic data and the Federal Reserve’s rate decision.
Investors are particularly keen on government data concerning domestic crude and fuel stockpiles, scheduled for release on Wednesday.