Oil prices rebounded on Wednesday, rising slightly as traders engaged in short-covering after Tuesday’s dip. Brent crude rose 39 cents (0.54%) to $72.28 a barrel, while U.S. WTI gained 31 cents (0.46%) to $68.43. Gains were capped by the dollar hitting a seven-month high, which makes oil pricier for holders of other currencies.
Tuesday’s drop came after OPEC cut its 2024 and 2025 demand forecasts due to weaker demand in China, India, and other regions—a bearish outlook still affecting the market, said Mizuho’s Bob Yawger. U.S. and global oil production are now projected to reach record highs, with U.S. output averaging 13.23 million barrels per day (bpd) and global production hitting 102.6 million bpd in 2024, according to the U.S. Energy Information Administration.
Ongoing OPEC+ coordination between Russia and Saudi Arabia and the potential for disruptions in Iran’s oil output due to geopolitical tensions provided some support for prices. Additionally, Trump’s anticipated choice of Marco Rubio as Secretary of State could drive prices higher due to Rubio’s hawkish stance on Iran, potentially impacting 1.3 million bpd of global supply.
Further limiting price gains, U.S. inflation data reinforced expectations of Fed rate cuts, strengthening the dollar. Meanwhile, market attention shifted to U.S. inventory data, with analysts forecasting a 100,000-barrel increase in crude stocks.