Crude oil prices surged more than $2 a barrel in early Wednesday trade, reversing the downward pressure that had weighed on benchmarks following a pause in fighting between the US and Iran.
The rally was driven by fresh data indicating a sharper-than-expected drawdown in US crude inventories, signaling tightening domestic supply conditions that are offsetting the bearish sentiment from the geopolitical truce.
This development follows a volatile week where energy prices had shed nearly 10% of their value amid fears of a prolonged ceasefire reducing risk premiums.
Brent crude and WTI futures both posted significant gains, with the market repricing the risk of near-term supply shortages.
The move marks a decisive shift in trader positioning, as the immediate threat of conflict-related disruptions has been replaced by concerns over structural supply tightness in the US market.
This development follows a volatile week where energy prices had shed nearly 10% of their value amid fears of a prolonged ceasefire reducing risk premiums.
The inventory draw suggests that US production or export flows may be lagging behind demand, creating a physical bottleneck that is supporting prices despite the easing geopolitical backdrop.