Tuesday, July 16, 2024
Home Stock Analysis Oil prices fall after hitting 7-week high on demand hopes, war fears Reuters

Oil prices fall after hitting 7-week high on demand hopes, war fears Reuters

by xyonent
0 comment
Crude Oil 800x533 L 1411982810.jpg

Deep Kaushik Vakil and Nia Williams

(Reuters) – Oil prices fell on Wednesday after hitting a seven-week high as optimism about summer demand and concerns about escalating conflict offset an industry report that showed an unexpected rise in inventories.

Futures were down 6 cents, or 0.1 percent, at $85.33 a barrel as of 1803 GMT, while U.S. West Texas Intermediate crude was down 8 cents, or 0.1 percent, at $81.57 a barrel.

Brent crude oil hit $85.84 a barrel in early trading, its highest since May 1, while WTI crude oil hit $81.96 a barrel, its highest since April 30.

Trading was slow due to a US holiday.

“The current situation is disappointing, but there are some signs pointing to a more optimistic outlook,” said Tamas Varga at oil broker PVM.

With Brent crude prices $8 above their lows in early June, “this signals real optimism that the global oil supply-demand balance will eventually tighten,” Varga added.

Both indexes have recovered strongly over the past two weeks and rose by more than $1 in yesterday’s trading after a Ukrainian drone attack caused a fire at an oil terminal at a major Russian port.

In the Middle East, Israeli Foreign Minister Katz has warned of the possibility of “all-out war” with Lebanon’s Hezbollah, even as the United States seeks to avoid a broader conflict between Israel and Iran-backed groups.

An escalation in the war could disrupt supplies in oil-producing regions.

“The potential for escalating tensions in the Middle East adds supply risk to the oil demand equation,” said Bart Melek, head of commodity strategy at TD Bank in New York, adding that recent U.S. economic data supports the view that the Federal Reserve will move to cut interest rates in the coming months.

Chinese data released this week showed industrial production fell less than expected in May, but retail sales, a measure of consumption, posted the fastest growth since February.

Meanwhile, market players, citing figures from the American Petroleum Institute, said on Tuesday that U.S. crude oil inventories rose by 2.264 million barrels in the week to June 14. Analysts polled by Reuters had expected crude inventories to fall by 2.2 million barrels.

However, gasoline inventories fell by 1.077 million barrels, while distillates stocks rose by 538,000 barrels, according to a person familiar with the matter who spoke on condition of anonymity. [API/S]

Official inventory data from the U.S. Energy Information Administration is due to be released on Thursday.

You may also like

Leave a Comment

About Us


At InvestXyon, we empower individuals with knowledge for informed investing, financial navigation, and secure futures. Our trusted platform covers investments, stocks, personal finance, retirement, and more.

Feature Posts


Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!