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- Brent crude futures climbed $1.39, or 1.8%, to $80.02 a barrel
- Top ministers from OPEC+ will hold an online joint ministerial monitoring committee meeting on Thursday
SINGAPORE: Oil futures rebounded more than $1 a barrel from seven-week lows on Wednesday after the killing of Hamas leader Ismail Haniyeh in Iran ratcheted up tensions in the Middle East, but prices stayed under pressure from concerns about weak China demand.
Brent crude futures climbed $1.39, or 1.8 percent, to $80.02 a barrel by 8:25 a.m. Saudi time ahead of expiry on Wednesday, while the more active October contract was at $79.41, up $1.34.
US West Texas Intermediate crude futures rose $1.38, or 1.9 percent, to $76.11 a barrel. Both Brent and WTI fell about 1.4 percent on Tuesday, closing at their lowest levels in seven weeks.
Tension in the Middle East heated up on news that Hamas leader Ismail Haniyeh was assassinated in the early hours of the morning in Iran, the Palestinian militant group said on Wednesday.
This came a day after the Israeli government claimed it killed Hezbollah’s most senior commander in an airstrike on Beirut on Tuesday in retaliation against Saturday’s cross-border rocket attack on Israel.
The latest attack took place despite diplomatic efforts by US and UN officials to avert a major escalation that could inflame the wider Middle East.
Separately, the US also conducted a strike in Iraq in the latest conflict in the region.
“I think putting it all together certainly raised the chances of escalation in the Middle East,” IG analyst Tony Sycamore said, adding: “Worth noting as well that after three straight weeks of declines, long positioning from speculative accounts in crude oil has been significantly reduced. Hence conditions are ripe for a rebound.”
Still, Brent and WTI are on track to post in July their biggest monthly loss since October 2023 on lingering concerns about China’s demand outlook and expectations OPEC+ will be sticking to their current deal to cut production and to start unwinding some cuts from October.
Top ministers from OPEC+ will hold an online joint ministerial monitoring committee meeting on Thursday at 12:00 p.m. Saudi time.
Slowing fuel demand in China, the world’s largest crude oil importer and the biggest contributor to global demand growth, is also weighing on oil markets.
China’s manufacturing activity in July shrank for a third month, an official factory survey showed on Wednesday, keeping alive expectations Beijing will need to launch more stimulus as a protracted property crisis and job insecurity drag on growth.
“I think the China story is also well priced in — it is what has driven the market lower in recent weeks,” ING head of commodities research Warren Patterson said.
In the US, crude, gasoline and distillate inventories fell last week, according to market sources citing American Petroleum Institute figures on Tuesday.
Data from the Energy Information Administration is due at 4.30 p.m. Saudi time on Wednesday.
Ten analysts polled by Reuters estimated that crude inventories on average fell by 1.1 million barrels in the week to July 26.