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Oil prices settle lower as US crude supplies jump, Middle East tensions ease

Published 17/04/2024, 02:28
© Reuters.
- Oil prices settled sharply lower Wednesday, pressured by a much larger-than-expected weekly build in U.S. inventories and easing fears about an escalating in the Iran-Israel conflict.

At 14:30 ET (13:30 GMT),West Texas Intermediate crude futures fell 3.1% to settle at $82.69 a barrel, Brent oil futures fell fell 3% to $87.29 a barrel.

US inventories grow more than expected  

The official U.S. inventory data, from the Energy Information Administration, showed weekly crude stockpiles rose by 2.7M, well above the 1.6M economists had forecast. 

The build came after a 5.8 million barrel rise in the prior week, and was largely driven by U.S. production remaining at record highs above 13 million barrels per day.  

Still, a drop in gasoline inventories, of about 1.2 million barrels, indicated that demand in the world’s biggest fuel consumer was picking up with the approaching summer season.

Concerns that restrictive U.S. monetary policy could further stymie demand in the world's largest economy this year also weighed, especially with economic growth already seen cooling. Mixed economic data from China added to these concerns. 

Iran-Israel escalation fears ease 

While Isreal is expected to act against Iran's recent drone and missile attack over the weekend, many expect the response from Tel Aviv will likely be measured. 

The easing fears of an escalation between Iran and Israel skirmishes forced traders to unwind bets somewhat of a wider war in the Middle East that would have threaten global crude supplies.

"There is a growing sense of calm in oil markets with each attack that doesn’t result in disruption to supply easing concerns that this could be a major issue for the oil market," ANZ Research said in a recent note.

(Peter Nurse, Ambar Warrick contributed to this report.)

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