NEW YORK: Oil prices were moderately lower on Wednesday as worries over conflict in the Middle East eased and business activity in the world’s largest oil consumer slowed, however, a fall in US crude oil inventories put a floor on those losses.
Brent crude futures were down 27 cents, or 0.31%, to $88.15 a barrel by 11:30 a.m. EDT (1530 GMT), while US WestTexas Intermediate crude futures fell 38 cents, or 0.46%, to $82.98.
That reversed some of Brent’s gains earlier in the week, buoyed by a weaker US dollar.
Oil falls back after robust EU data as Mideast tensions linger
“It appears the fundamentals that we trade with are leaning towards a little settling down in the Middle East,” said Tim Snyder, economist at Matador Economics.
Perceived de-escalation between Iran and Israel could remove another $5-10 a barrel in coming months, Goldman Sachs analysts said in a note.
US crude stockpiles fell by 6.4 million barrels to 453.6 million barrels in the week ended April 19, the EIA said, compared with analysts’ expectations in a Reuters poll for a 825,000-barrel rise.
The large crude draw was the result of very high crude exports, said UBS analyst Giovanni Staunovo. But it could be a one off, he said, as preliminary tanker tracking data this week shows lower exports.
US business activity cooled in April to a four-month low, with S&P Global saying on Tuesday that its flash Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 50.9 this month from 52.1 in March.
US interest rate cuts could bolster economic growth and, in turn, stimulate demand for oil.
Elsewhere, Germany’s business morale improved more than expected in April, according to a survey on Wednesday, boosting hopes that the worst may be over for Europe’s biggest economy.
Even as concerns about geopolitical tension in the Middle East eased, the Israel-Hamas conflict continues to rage with some of the heaviest shelling in weeks on Tuesday. Sources on Wednesday said Israel is preparing to evacuate Rafah ahead of a promised assault on the city.