Brent and WTI Oil Prices Flat as Market Weighs Lower Demand and Middle East Tensions; EIA Inventory Report Dents Prices
Oil prices were relatively unchanged after a 3% decline in the previous session due to concerns over lower demand this year and potential conflict in the Middle East.
Brent crude was up 0.15% to $87.42 a barrel, while US WTI crude was 0.07% higher at $82.75 a barrel.
The drop in prices came as fuel demand has been lower than expected due to economic growth in China and rising US oil inventories.
Analysts at JP Morgan reported that worldwide oil consumption in April was 200,000 barrels per day below their forecast, averaging 101 million bpd.
Demand has risen by 1.7 million bpd since the start of the year, below their November forecast of 2 million bpd.
Investors believe that the chance of a strong Israeli retaliation against Iran's missile and drone attack on April 13 is low, as Iran is a major oil producer in OPEC and an easing of the conflict between the two countries would reduce the risk of supply disruptions in the Middle East.
The price of Brent crude oil has returned to pre-attack levels, indicating that the recent risk premium from heightened tensions has dissipated.
Additionally, surging US crude inventories kept a lid on prices, with inventories rising by 2.7 million barrels to 460 million barrels in the week ending April 12, significantly more than analysts' expectations.
The Energy Information Administration (EIA) reported a larger-than-expected decrease in gasoline and distillate stockpiles in the US.
Gasoline stocks dropped by 1.2 million barrels to 227.4 million barrels, while distillate stockpiles, which include diesel and heating oil, declined by 2.8 million barrels to 115 million barrels.
Analysts had anticipated a smaller decrease for distillate stockpiles.
The bearish inventory report led investors to sell off their positions and lock in profits following recent gains.