Brent crude futures rose by 39 cents, or 0.54%, settling at $72.28 per barrel, while U.S. West Texas Intermediate (WTI) crude futures increased by 31 cents, or 0.46%, to $68.43.
On Tuesday, both benchmarks had closed at their lowest levels in almost two weeks following the Organization of the Petroleum Exporting Countries' downward adjustment of its global oil demand growth projections for 2024 and 2025, attributing the revisions to weak demand from China, India, and other regions. This marked the fourth consecutive reduction for 2024 by the producer group.
"The forecast is undoubtedly bearish, and the market is still processing it," commented Bob Yawger, director of energy futures at Mizuho, noting that the market's recovery was driven by some speculative investors seeking to recover losses.
According to the U.S. Energy Information Administration, both U.S. and global oil production are anticipated to reach slightly higher record levels this year than previously estimated. U.S. oil output is now projected to average 13.23 million barrels per day (bpd), while global production is expected to hit 102.6 million bpd.
The International Energy Agency, which has a more conservative demand growth forecast compared to OPEC, is scheduled to release its updated estimates on Thursday.
In a phone conversation on Wednesday, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman emphasized the necessity of maintaining "close coordination" within OPEC+, which provided some additional support to the market.
On the supply front, potential disruptions could arise from Iran or escalating tensions between Iran and Israel.
"If this conflict persists, Israel may eventually target Iranian oil assets," stated Clay Seigle, an independent political risk strategist. He noted that while such actions might focus on Iran's refineries, Israeli strategists could have broader ambitions, potentially targeting production and export facilities.
Senator Marco Rubio, anticipated to be appointed as Secretary of State by Trump, may positively influence oil prices due to his aggressive stance on Iran, which could lead to the enforcement of sanctions and a potential reduction of 1.3 million barrels per day from the global market, according to Ashley Kelty of Panmure Liberum.
In response, Iran's oil minister indicated that Tehran has developed strategies to maintain its oil production and exports, and is prepared for any potential restrictions imposed by the U.S., as reported by the ministry's news outlet, Shana.
Meanwhile, the dollar has strengthened, nearing a seven-month peak against major currencies, following data that revealed U.S. inflation for October met expectations. This suggests that the Federal Reserve may continue its trend of rate cuts. A stronger dollar makes oil priced in dollars more costly for foreign currency holders, which could dampen demand.
Attention is also on the American Petroleum Institute's weekly inventory report, scheduled for release at 4:30 p.m. EST (2130 GMT), with analysts surveyed by Reuters predicting a 100,000-barrel increase in crude oil stocks for the previous week. Government data will be released on Thursday at 11 a.m., with both reports delayed by a day due to the Veterans Day holiday on Monday.