(Bloomberg) — Oil steadied after a two-day gain as traders assessed rising tensions in the Middle East, indications of higher US stockpiles, and the likely course of the Federal Reserve’s rate path.

Most Read from Bloomberg

Brent traded near $74 a barrel after rising almost 3% over the previous two days, with West Texas Intermediate above $71. Hezbollah accused Israel of orchestrating an attack involving pagers in Lebanon that left a number of people dead and wounded thousands. The incident raised fears of an all-out war in the Middle East and buoyed prices on Tuesday.

In the US, a report from the industry-funded American Petroleum Institute showed that nationwide crude inventories rose by almost 2 million barrels last week, with gasoline and distillates holdings also ballooning, according to people familiar with the data. Stockpiles of crude at the Cushing hub fell, however.

Crude remains markedly lower year-to-date, with China’s dour demand outlook and plans for OPEC+ to eventually bring back shuttered supply weighing on prices. That’s being offset by prospects for US monetary policy, with investors expecting that the Fed will start lowering rates later Wednesday, although there’s no consensus about the size of the cut.

Reflecting the demand weakness, some refineries in Europe have been reducing processing rates as profits from refining crude into fuels drop. In China, the largest oil importer, poor margins have led to the bankruptcy of two small plants.

To get Bloomberg’s Energy Daily newsletter into your inbox, click here.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.