Oil Prices Hold Steady as Investors Assess US Interest Rate Cut Prospects Amid Middle East Tensions

Oil Prices Stabilize on Wednesday, Countering Previous Session Losses, Amid Expectations of Prolonged US Interest Rate Cuts and Ongoing Red Sea Shipping Concerns

Brent crude futures declined by 14 cents, or 0.17%, reaching $82.20 per barrel by 1511 GMT, while U.S. West Texas Intermediate crude futures (WTI) saw a decrease of 9 cents, or 0.12%, settling at $76.95.
Both Brent and WTI contracts retreated from their recent near three-week highs on Tuesday, experiencing declines of 1.5% and 1.4%, respectively.

The spread between front-month April Brent futures and September contracts, known as backwardation, peaked on Monday at $3.64 a barrel, its highest level since October 31st, before moderating to around $3.50.

Tuesday's decline was attributed to a lack of significant developments in global conflict zones, prompting investors to refocus on broader macroeconomic factors, according to PVM analyst John Evans in a note released on Wednesday.

Concerns about the timing of Federal Reserve rate cuts have put pressure on the outlook for oil demand. Last week's U.S. inflation data pushed back expectations for an immediate start to the Fed's easing cycle, with economists surveyed by Reuters now anticipating a cut in June.

"Brent has shown renewed correlation with equities, which has intertwined its movements with the ongoing debate over interest rate trajectories impacting the stock market," remarked Callum Macpherson, Head of Commodities at Investec, in comments to Reuters.