Investing.com-- Oil prices rose in Asian trade on Wednesday, recouping some of the prior session’s steep losses, although signs of an outsized build in U.S. inventories limited gains.
Oil prices plummeted more than 4% on Tuesday following reports that Lebanese military group Hezbollah was seeking a ceasefire with Israel, pointing to a potential de escalation in the Middle East conflict.
Waning optimism over new stimulus measures in top oil importer China also weighed, after authorities declined to introduce stronger, fiscal stimulus measures to shore up slowing growth.
Brent oil futures expiring in December rose 0.6% to $77.63 a barrel, while West Texas Intermediate crude futures rose 0.6% to $73.40 a barrel by 21:14 ET (01:14 GMT).
API data shows bumper build in US inventories
Limiting crude’s recovery, data from the American Petroleum Institute showed U.S. oil inventories grew by 10.9 million barrels in the past week, much more than expectations for a build of 1.95 mb.
The reading usually heralds a similar trend from official inventory data, which is due later on Wednesday, and sparked some concerns that U.S. fuel demand was cooling, especially as the country’s mid-South grappled with a series of devastating hurricanes.
Traders were watching for any potential disruptions in oil supply from Hurricane Milton, one of the strongest hurricanes seen in recent history. The category-5 storm is set to make landfall in Florida this week, but is expected to largely dodge most oil and gas operations in the Gulf of Mexico.
Middle East conflict in focus amid Hezbollah calls for ceasefire
Oil was pressured by reports that Hezbollah was calling for a ceasefire as Israel continued to target its top leadership, while both sides continued to launch offensives against each other.
Still, the prospect of a ceasefire points to a potential de escalation in the Middle East conflict, which has otherwise been a key point of support for oil prices.
Oil markets rallied over the past week after Iran and Hezbollah launched missile strikes against Israel, ramping up concerns over a potential escalation in the Israel-Hamas war, which could potentially disrupt oil production in the Middle East.
Traders were still on edge over Israel attacking Iran’s oil facilities, which could mark a serious escalation in the war.