Oil Prices Steady Amid US Fuel Demand Decline and Middle East Tensions
Oil prices were relatively unchanged on Thursday as decreasing fuel demand in the US was offset by increasing conflict risks in the Middle East, according to Reuters.
Brent crude rose 0.2% to $88.20 a barrel, while US WTI crude gained 0.2% to $82.94 a barrel.
US Energy Information Administration data showed that gasoline stockpiles decreased less than anticipated, while distillate stockpiles increased, indicating slowing demand.
This comes as US business activity cools in April and inflation and employment data suggest the Federal Reserve may delay interest rate cuts, dampening economic sentiment.
Emril Jamil, a senior oil analyst at LSEG Oil Research, explained that the recent drop in benchmark oil prices, which had previously risen above $90 per barrel, is due to a shift in market sentiment from geopolitical tensions to economic concerns.
In the coming quarter, prices will be influenced by factors such as supply cuts from major producers, economic data from China and the Eurozone, and increasing demand as the Northern Hemisphere enters summer.
Additionally, the release of US gross domestic product and March personal consumption expenditure data will provide insight into the Federal Reserve's interest rate intentions.
Furthermore, the ongoing conflict between Israel and Hamas in the Gaza Strip could escalate into a wider war, potentially disrupting oil supplies.
Tensions between Israel and Iran, the major oil-producing country backing Hamas, have eased but are expected to worsen, increasing the risk of conflicts spreading to neighboring countries and driving up oil prices.
Additionally, crude oil stocks in the United States decreased by 6.4 million barrels last week, contrary to expectations for an increase.