The prices of the oil fell 1% on Wednesday after crude inventories in USA rose unexpectedly and slightly eased concerns that a wider conflict in Middle East could threaten supplies from one of the world’s key production regions.
The futures of the Brent closed down 93 cents, or 1.15%, at $79.76 a barrel. U.S. crude futures West Texas Intermediate fell $1.37, or 1.8%, to $76.98 a barrel.
U.S. crude inventories rose by 1.4 million barrels, compared with estimates for a 2.2 million barrel drop, according to data from the U.S. United States Energy Information Administration. This increase was the first after six consecutive weeks of declines.
Brent had risen more than 3% on Monday to cap a five-day winning streak, closing at $82.30 a barrel, after hitting a seven-month low of $76.30 earlier last week.
“That six-week drop was pretty impressive, but that’s behind us now. The fact that we’ve broken the streak should weigh on prices a bit,” he said. Robert Yawger, director of energy futures at Mizuho in New York.
The conflict in the Middle East ceases
“The recent rally in crude oil came to a halt yesterday as prices retreated as fears of a retaliatory attack on Israel by Iran eased and the risk premium narrowed,” said Ashley Kelty, an analyst at Panmure Liberum.
Iran had promised a tough response to the killing of the Hamas leader late last month. Three senior Iranian officials have said that only a ceasefire agreement in Gaza would prevent Iran from taking direct retaliation against Israel for the killing.
For its part, Israel has neither confirmed nor denied his involvement, but is fighting in Loop against Hamas after the group attacked Israel in October. To counter Iran, The US Navy has deployed warships and a submarine to the Middle East.
“The extent of Iran’s retaliation, as well as Israel’s response, will likely determine whether the current conflict in the Middle East widens into a regional conflict,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia.
Less demand by 2025
Another factor that also hindered the rise in oil prices was that the International Energy Agency (IEA) on Tuesday cut its estimate for oil demand growth through 2025, citing the impact of a weakening Chinese economy on consumption.
This came after the OPEC cut expected demand for 2024 for similar reasons where signs of healthier US demand had supported prices in earlier trading.
“He American Petroleum Institute reported a significant reduction in crude oil inventories USA of 5.2 million barrels, much more than the expected decline of 2 million. The data indicates that oil demand remains healthy,” said Danish Lim, investment analyst at Phillip Nova.
Source: Ambito
