(Bloomberg) — Oil traded in a narrow range after two days of gains as geopolitical risk in the Middle East was partially offset by a report showing stockpiles expanding in the US.
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Brent crude approached $79 a barrel after climbing 1.6% over the previous two sessions, while West Texas Intermediate was near $74. The Houthis said they targeted two ships in the southern Red Sea, the latest in a string of attacks that has forced a major re-routing of global trade. The US has vowed more strikes against Iranian forces and their proxies in the region.
The industry-funded American Petroleum Institute said US nationwide crude inventories grew by 674,000 barrels last week, according to people familiar with the data. Stockpiles of gasoline also expanded, as did holdings at the Cushing storage hub. The Energy Information Administration will release official figures later on Wednesday.
Crude is only slightly higher than it was at the start of the year, with the Middle East war premium and rising transport costs largely canceled out by a shaky macroeconomic outlook. The lackluster price moves are belying a boom in oil derivatives trading, with aggregate open interest across the main futures contracts rising to the highest since March 2022.
Expectations of an early pivot to interest-rate cuts in the US this year have faded, with swap markets pricing in just a 20% chance of a reduction in March. Federal Reserve Bank of Cleveland President Loretta Mester said policymakers want to see more evidence that inflation is cooling.
The “focus for oil markets has shifted more to macro after months of supply-demand uncertainties,” said Charu Chanana, an analyst at Saxo Capital Markets Pte in Singapore. “Range-bound trading is likely to continue until interest-rate cuts come closer.”
Meanwhile, there are tentative signs that Israel and Hamas are moving nearer to agreeing on a pause in hostilities. Qatar’s prime minister said Hamas delivered a positive response to a proposal to halt fighting in the Gaza Strip in exchange for the release of some Israeli hostages.
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