Jakarta,- Oil prices stabilised as investors await the US Federal Reserve's decision on interest rate cuts. Market players are still watching the potential for further conflict in the Middle East which will support rising oil prices.

Based on Refinitiv data on Wednesday (18/9/2024) at 9.19 WIB, the price of Brent benchmark oil for November delivery remained at U$73.67 per barrel. Meanwhile, US benchmark West Texas Intermediate (WTI) crude oil for October delivery edged down 0.2%, to US$71.08 per barrel.

Crude oil prices were supported by the belief that demand will increase following a potential interest rate cut by the Fed, which would be the first in four years.

Prices were also supported by the potential for further conflict in the Middle East that could lead to production disruptions in major oil-producing regions, after Israel allegedly attacked the Hezbollah militant group with an explosive device in Lebanon.

‘The market has calmed down after fears of hurricane damage and rising tensions in the Middle East were taken into account,’ said Mitsuru Muraishi, analyst at Fujitomi Securities, quoted by Reuters on Wednesday (9/18/2024).

‘Now, investors are focused on Fed rate cuts that could revive US fuel demand and weaken the dollar,’ he added, predicting that oil prices are likely to remain bullish after Brent hit its lowest level since 2021 last week.

Hezbollah vowed to retaliate against Israel after explosive devices went off across Lebanon on Tuesday, killing at least eight people and injuring nearly 3,000 others, including Iranian fighters and envoys in Beirut. Israel declined to comment on the blasts.

The market also gained support from expectations of US oil purchases for the Strategic Petroleum Reserve (SPR).

The Biden administration will seek up to 6 million barrels of oil for the SPR, sources familiar with the matter said on Tuesday. This purchase, if realised, would be the largest ever in replenishing the reserve after historical sales in 2022.

US oil inventory data released on Tuesday by the American Petroleum Institute (API) showed mixed results. Crude stocks rose by 1.96 million barrels in the week ended 13 September, according to market sources citing API figures, but gasoline and distillate stocks rose by about 2.3 million barrels.

Analysts polled by Reuters had expected on average that crude inventories fell by about 500,000 barrels last week. A report from the US Energy Information Administration (EIA) will be released on Wednesday.