Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Oil settles down 3% as demand worries outweigh Middle East supply risks

Published 17/04/2024, 02:20
© Reuters. FILE PHOTO: An aerial view shows Vladimir Arsenyev tanker at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo
LCO
-
CL
-

By Laura Sanicola

(Reuters) -Oil prices settled down 3% on Wednesday, pressured by a rise in U.S. commercial inventories, weaker economic data from China and U.S. progress on Ukraine and Israel aid bills.

Brent futures for June settled down $2.73, or 3%, at $87.29 a barrel, while U.S. crude futures for May settled down $2.67 or 3.1% at $82.69 a barrel, their biggest fall since March 20.

Oil prices have softened this week as economic headwinds curb gains from geopolitical tensions, with markets eying how Israel might respond to Iran's weekend attack.

Analysts do not expect Iran's unprecedented missile and drone strike on Israel to prompt dramatic U.S. sanctions on Iran's oil exports.

U.S. crude inventories rose by 2.7 million barrels to 460 million barrels last week, government data showed, nearly double analysts' expectations in a Reuters poll for a 1.4 million-barrel build. [EIA/S]

Oil prices continued to decline after U.S. House of Representatives Speaker Mike Johnson said the text of four bills providing assistance to Ukraine, Israel and the Indo-Pacific would be filed "soon today," with a fourth with "other measures to confront Russia, China and Iran" posted later in the day.

"The market was waiting to sell off on indications of calming of tensions in the Middle East ... progress on these bills and a three-day delay in Israel's response to Iran is helping today," said John Kilduff, partner at Again Capital LLC in New York.

Top Federal Reserve officials including Chair Jerome Powell backed away on Tuesday from providing any guidance on when interest rates may be cut, dashing investors' hopes for meaningful reductions in borrowing costs this year.

Britain's inflation rate slowed by less than expected in March, signaling that a first rate cut by the Bank of England could also be further off than previously thought.

However, inflation slowed across the euro zone last month, reinforcing expectations for a European Central Bank rate cut in June.

"A strengthening trend in the US dollar and the ability of crude stocks to increase in the face of reduced Mexican imports and increasing SPR refills are also sending off some bearish vibes," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

© Reuters. FILE PHOTO: An aerial view shows Vladimir Arsenyev tanker at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo

In China, the world's biggest oil importer, the economy grew faster than expected in the first quarter, but several other indicators showed that demand at home remains frail.

Elsewhere, Tengizchevroil announced plans for scheduled maintenance at one of six production trains at the Tengiz oilfield in Kazakhstan in May.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.