Oil prices regained some ground in Asian trade on Wednesday amid concerns over attacks on shipping in the Red Sea and growing expectations that cuts to US interest rates will take longer than thought.
Brent crude futures rose 24 cents or 0.3% to $82.58 a barrel by 7:21 GMT, while US West Texas Intermediate crude futures (WTI) were up 21 cents or 0.3% at $77.25.
The Brent and WTI contracts fell 1.5% and 1.4%, respectively, from near three-week highs on Tuesday as the premium for prompt US crude futures to the second-month contract more than doubled to $1.71 a barrel - its widest level in roughly four months.
That encourages energy companies to sell now rather than paying to store products for future months. The premiums slid to 4 cents a barrel on Wednesday.
"Crude futures prices have become relatively range-bound and have at least $6-7 per barrel of risk premium embedded at current levels," said Vandana Hari, founder of oil market analysis provider Vanda Insights.
She said prices could remain range-bound until the next turning point in the Gaza crisis, whether that be a de-escalation through a ceasefire or an exacerbation by Israel's onslaught in Rafah.
Attacks on ships in Red Sea continue
Attacks in support of the Palestinians on vessels in the Red Sea and Bab al-Mandab strait by Yemen's Iran-aligned Houthis have continued to stoke concerns over freight flows through the critical waterway. Drone and missile strikes have hit at least four vessels since Friday.
Washington on Tuesday again vetoed a draft United Nations Security Council resolution on the Israel-Hamas war, blocking a demand for an immediate humanitarian ceasefire. The U.S. is instead pushing for the Security Council to adopt a resolution tying a ceasefire to the release of Israeli hostages by Hamas.
Meanwhile, Russia, which has pledged output cuts of 500,000 barrels per day (bpd) as part of a package of cuts with the Organization of Petroleum Exporting Countries and its allies (OPEC+), said on Tuesday that it intends to fulfill its OPEC+ quota in February despite a decline in oil refining.
Refinery throughput in Russia has fallen by 7% since the start of the year, the country's energy minister said on Tuesday, after facilities were damaged by Ukrainian drone attacks.
Concerns that rate cuts by the Federal Reserve could take longer than thought have weighed on the outlook for oil demand. US inflation data last week pushed back expectations for an imminent start to the Fed's easing cycle, with economists polled by Reuters now forecasting a cut in June.
US crude inventories were seen up last week, while distillates and gasoline stockpiles were seen dropping, a preliminary Reuters poll showed on Tuesday.
Analysts polled by Reuters estimated on average that crude inventories rose by about 4.3 million barrels in the week to Feb. 16.