Oil prices rebound as Gaza ceasefire talks stall

Oil prices experienced a rebound on Wednesday following two consecutive days of decline. The impasse in Gaza ceasefire negotiations reignited concerns about Middle East supply security, counterbalancing a larger-than-anticipated increase in US crude inventories. Brent crude futures climbed by 25 cents to reach $89.67 per barrel, while US West Texas Intermediate crude futures saw a 24-cent rise to $85.47. Despite ongoing geopolitical tensions in the Middle East due to the prolonged conflict between Israel and Gaza, both benchmarks remained down approximately 1.7% from the previous week.

The failure of an Israeli ceasefire proposal to meet the demands of Palestinian militant factions raised doubts about a swift resolution to the conflict. This situation could potentially draw in more regional players, notably Iran, the third-largest producer in OPEC. Additionally, US crude stocks surged by 3.03 million barrels last week, exceeding analysts' expectations of a 2.4 million barrel increase. The official US government inventory data is eagerly awaited to provide further insights.

Market analysts caution that the risks in the oil market persist on the upside. Any unexpected events, such as deviations in US CPI data or geopolitical escalations like the recent killing of Iranian generals in Syria, could reignite the upward trend in oil prices. Furthermore, the US Energy Information Administration revised its forecast for US crude oil output, projecting a rise to 13.21 million barrels per day by 2024.

In conclusion, the uncertainty surrounding the Gaza conflict and the potential involvement of other regional powers continue to influence oil prices. The market remains sensitive to geopolitical developments and supply dynamics, underscoring the need for vigilance among investors and industry stakeholders.