Oil prices rose moderately early in the session on the back of rising Chinese stock markets, ongoing tensions in the Middle East and shaky demand prospects. However, oil soon moved into negative territory, which was caused by the strengthening of the US currency, as well as a correction of positions ahead of the publication of weekly data on oil reserves in the United States.
Yesterday, Brent and WTI oil prices fell by 1.5% and 1.4%, respectively, due to the uncertain prospects for global demand, which offset some risk premium due to the conflict between Israel and Hamas. Yesterday, the United States again vetoed a draft UN Security Council resolution on the war between Israel and Hamas, blocking the demand for an immediate humanitarian ceasefire. Instead, the United States insists that the Security Council adopt a resolution linking the cease-fire to the release of the Israeli hostages.
Meanwhile, attacks on ships in the Red Sea and the Bab el-Mandeb Strait continue to raise concerns about cargo flows through the crucial waterway. At least four ships have been hit by drones and missiles since Friday.
Concerns that the Fed's rate cuts may take longer than expected also weighed on the outlook for oil demand.
As for data on US crude oil inventories, the American Petroleum Institute (API) report will be published today at 21:30 GMT, and official data from the Energy Information Administration (EIA) will be released tomorrow. Economists expect the EIA to report an increase in oil reserves by 4,298 million barrels. At the same time, a reduction in distillate and gasoline stocks is predicted.