Oil prices were moderately lower on Wednesday, April 24, as worries over conflict in the Middle East eased and business activity in the world’s largest oil consumer slowed down, however, a fall in US crude oil inventories put a floor on the losses. Oil prices have pulled back from recent highs above $90 per barrel ever since the geopolitical risks in the Middle East began to ease.
Brent crude futures were down 27 cents, or 0.31 per cent, to $88.15 a barrel, while US West Texas Intermediate crude futures fell 38 cents, or 0.46 per cent, to $82.98. That reversed some of Brent’s gains earlier in the week, buoyed by a weaker US dollar. Coming to domestic prices, crude oil futures last traded 0.49 per cent lower at ₹6,894 per barrel on the multi commodity exchange (MCX).
What’s dragging crude oil prices?
-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, said the Energy Information Administration (EIA).
-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, according to Reuters.
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Published: 24 Apr 2024, 10:28 PM IST