Oil Steadies as Traders Weigh Middle East Risks, China Outlook

(Bloomberg) -- Oil steadied, after four days of declines, as traders weighed potential risks to production from the Middle East, while another China briefing again left some investors underwhelmed.

Brent traded above $74 a barrel, after losing almost 7% over the prior four sessions, while West Texas Intermediate neared $71. After advancing in early morning trade, Brent followed a retreat by other commodities during a housing-policy brief in China, where the announced stimulus — including increased loans for property projects — fell short of market expectations.

Both benchmarks had slid earlier in the week after reports that Israel would avoid strikes on Iran’s crude facilities in retaliation for an Oct. 1 attack. In the Middle East, US stealth bombers hit weapons storage sites linked to Iran-backed Houthi rebels in Yemen, Israel stepped up air strikes on Lebanon, and an oil leak near a key terminal in Iran heightened attention on the OPEC member’s export facilities.

“While geopolitics continue to cloud the fundamental judgment of investors, underwhelming signals from China will limit any substantial reversal in bearish trends,” said Priyanka Sachdeva, a senior market analyst at brokerage Phillip Nova Pte in Singapore.

Oil prices have been buffeted this month as concerns over the conflict in the Middle East, which supplies about a third of the world’s crude, were pared by increasing bearish signals. Rising production from outside OPEC and sluggish demand growth will lead to a “sizable surplus” next year, barring any major disruption to flows, the International Energy Agency said this week.

Meanwhile, an industry group reported US crude stockpiles fell 1.6 million barrels last week. That would be the first decline in three weeks if confirmed by official data later Thursday. 

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