Oil Prices Edge Higher on Surprise Drop in US Crude Stocks Amid Middle East Tensions
Surprise Drop in US Crude Stocks Boosts Oil Prices
Oil prices experienced a slight uptick on Wednesday, driven by unexpected data revealing a decrease in US crude inventories last week. Despite ongoing concerns surrounding hostilities in the Middle East, the positive sign for demand provided some support to the market.
Brent Crude Futures Show Marginal Gain
Brent crude futures saw a modest increase of 5 cents, or 0.06%, reaching $88.47 per barrel. Similarly, US West Texas Intermediate crude futures climbed by 8 cents, or 0.1%, to $83.44 a barrel as of 0410 GMT.
Surprising Inventory Drawdown
According to sources citing figures from the American Petroleum Institute (API), US crude inventories experienced an unexpected drop of 3.237 million barrels during the week ended April 19. This came as a surprise to analysts, who had anticipated a rise of 800,000 barrels based on a Reuters poll.
Awaiting Official Confirmation
Traders are eagerly awaiting the release of official US data on oil and product stockpiles, scheduled for 10:30 a.m. EDT (1430 GMT). Confirmation of the significant drawdown could further influence market sentiment.
US Business Activity Cools
S&P Global reported a cooling in US business activity for April, with its flash Composite PMI Output Index dropping to a four-month low of 50.9 from 52.1 in March. Analysts suggest that this decline could prompt policymakers to consider rate cuts to support economic growth.
Impact of Potential Rate Cuts
Speculation surrounding US interest rate cuts continues to linger, with expectations that such measures could stimulate economic growth and subsequently increase demand for oil in the world's leading consumer market.
Monitoring Middle East Developments
While the focus remains on the unexpected drawdown in US crude stocks, analysts are keeping a close watch on the evolving conflicts in the Middle East. Recent reports indicate that both Iran and Israel view current operations as concluded, potentially alleviating immediate concerns about oil supply disruptions.
Preparations for Further Sanctions
Amidst ongoing tensions, the US and Europe are reportedly preparing for additional sanctions against Iran. However, analysts suggest that these measures may not have an immediate impact on oil supply.
Intensified Israeli Strikes in Gaza
Meanwhile, Israeli airstrikes intensified across Gaza on Tuesday, marking some of the heaviest shelling in weeks. Despite the escalation in hostilities, the impact on oil markets remains limited for the time being.
