Oil prices advanced modestly on Wednesday as market participants assessed the stability of a ceasefire between Iran and Israel, while improved U.S. demand indicators and expectations of near-term interest rate cuts by the Federal Reserve offered additional support to the energy complex.
Brent crude oil, the international benchmark for Nigerian oil, rose by 48 cents or 0.7 percent to $67.62 per barrel at 11:30 a.m. in Nigeria, while West Texas Intermediate (WTI) crude gained 44 cents or 0.7 percent to $64.81 per barrel.
The recovery in prices reflects reduced fears of a wider conflict in the Middle East after a U.S.-brokered ceasefire took effect. Both Iran and Israel signaled an end to their air campaign earlier this week following a public warning from U.S. President Donald Trump.
Civilian restrictions were lifted in both countries, ending nearly two weeks of heightened military tensions that had previously driven crude prices to five-month highs.
“Concerns about oil supply disruptions have declined,” said Giovanni Staunovo, a commodity analyst at UBS. “The drawdown shows that demand is still holding up in the U.S., the trade tensions were not as bad as some were fearing.”
Industry data released on Tuesday by the American Petroleum Institute (API) showed U.S. crude inventories fell by 4.23 million barrels in the week ended June 20, indicating sustained demand from the world’s largest oil consumer.
The market awaits official government data due later today for confirmation.
Analysts note that the current pricing reflects a cautious optimism. ING, in a client note, stated, “While concerns regarding Middle Eastern supply have diminished for now, they have not entirely disappeared, and there remains a stronger demand for immediate supply.”
Beyond geopolitical developments, oil traders are also monitoring macroeconomic signals from the United States. Federal Reserve Chair Jerome Powell, in testimony before Congress on Tuesday, hinted at the possibility of advancing the timing of the first rate cut of 2025 to as early as July, depending on the data trajectory. Lower interest rates tend to stimulate economic activity and energy consumption.
“Fed Chair Powell’s first testimony to Congress has hinted at a slight chance of bringing forward the first rate cut of 2025 to July … which should offer some form of floor on oil prices from the demand side,” said Kelvin Wong, Senior Market Analyst at OANDA.
U.S. consumer confidence and other macroeconomic data released overnight pointed to a slower-than-expected pace of growth, reinforcing expectations of policy easing. Futures markets are now pricing in nearly 60 basis points of Fed rate cuts by December.
Despite the short-term uptick, market analysts expect crude prices to consolidate in the $65 to $70 per barrel range amid lingering uncertainty around global growth and oil demand.
Independent analyst Tina Teng noted that traders will remain cautious and data-dependent, especially with more U.S. economic releases and the Fed’s policy decision on the horizon.
