The United States (US), the world’s largest oil user, is seeing a decline in demand, outpacing supply worries stemming from Middle East tensions, according to inventory data.
The closing price of the previous trading session, which saw the international benchmark Brent oil close at $90.02 per barrel, fell by 0.33% to $89.72 per barrel. At the same moment, the U.S. benchmark West Texas Intermediate (WTI) was trading at $85.02, down 0.40% from the previous session’s closing price of $85.36 a barrel.
After data suggesting negative demand in the US was released, prices fell during early Asian trade. Contrary to market expectations of a drawdown, the American Petroleum Institute said late on Tuesday that US crude oil stocks were expected to rise by 4.09 million barrels.
Later in the day, the Energy Information Administration (EIA) will disclose official numbers. If the data shows an increase in the stocks of gasoline and crude oil, prices are predicted to drop even further. Oil prices are still impacted by the uncertainty around the US Federal Reserve’s (Fed) decision to begin reducing interest rates.
The likelihood that the bank will begin lowering interest rates dropped to 15% in June and 42% in July, according to analysts, who anticipate that the Fed will maintain the policy rate steady in May. A 67% chance is assigned to the Fed cutting interest rates for the first time in September.
Price reductions were hampered, however, by worries about the conflict’s potential to expand to the Middle East, which is home to most of the world’s oil supplies.
Israel carried out an air attack on Iran’s consulate building in Damascus on April 1. A total of seven people from the Iranian Revolutionary Guards Army, including two generals, died in the attack. On April 13, Iran launched an attack on Israel with hundreds of kamikaze unmanned aerial vehicles and ballistic and cruise missiles.
Tension in the Middle East increased on Monday as Israeli Chief of Staff Herzi Halevi declared that Israel would retaliate against the Iranian attack.
