Oil prices rose slightly in Asian trade on Wednesday as renewed military action between Israel and Hamas threatened to upset a recent ceasefire, although caution before the conclusion of a Federal Reserve meeting kept traders to the sidelines.
Oil prices stemmed two straight days of losses, as markets looked to potential supply disruptions from renewed hostilities in the Gaza strip. Recent U.S. sanctions against Russia also buoyed prices.
Oil also took support from industry data showing an unexpected draw in U.S. oil inventories over the past week.
But crude prices remained fragile amid persistent fears of a looming supply glut, especially as recent reports showed the Organization of Petroleum Exporting Countries and allies (OPEC+) was gearing up to hike production again.
Brent oil futures for December rose 0.3% to $64.58 a barrel, while West Texas Intermediate crude futures rose 0.3% to $60.30 a barrel by 21:09 ET (01:09 GMT).
Gaza ceasefire tested after Israel-Hamas strikes Israel on Tuesday launched attacks in Gaza after accusing Palestinian group Hamas of violating a U.S.-brokered ceasefire in the region.
Tuesday’s attacks were the second instance of military action in Gaza after Israel and Hamas agreed to the first steps of a U.S.-brokered peace deal signed earlier in October.
Resurgent military action between Israel and Hamas threatens to upset the ceasefire– a notion that spurred renewed concerns over potential oil supply disruptions in the Middle East. But U.S. officials said that the ceasefire still appeared to be holding. The deal had sought to end more than two years of bitter fighting between Israel and Hamas.
Oil prices had fallen on news of the ceasefire, as traders priced out some risk premium from crude.
Fed rate cut, commentary in focus Gains in oil prices were largely stalled by anticipation of the Fed.
The central bank is widely expected to cut interest rates by 25 basis points later on Wednesday, especially after data last week showed further cooling in U.S. inflation.
But focus will be squarely on Fed Chair Jerome Powell’s comments on the economy and future monetary policy, especially with markets split over how much further the Fed will cut rates.
The dollar firmed before the Fed decision, lending oil some support.
But despite logging some gains last week, oil prices were still trading largely negative for 2025, as traders fretted over slowing demand and rising supplies.
The OPEC+ is at the heart of oil’s oversupply concerns, as the cartel began scaling back two years of production cuts this year. Reports said the cartel is gearing up to approve more output hikes at a meeting scheduled for this weekend.
