Oil prices experienced a slight increase on Wednesday following the release of industry data indicating a surprising decline in U.S. crude stocks last week. This positive sign for demand was tempered by ongoing geopolitical concerns in the Middle East, which continue to draw close attention from markets.
Brent crude futures registered a gain of 5 cents, or 0.06%, to settle at $88.47 per barrel. Concurrently, U.S. West Texas Intermediate crude futures climbed by 8 cents, or 0.1%, to reach $83.44 per barrel at 0410 GMT.
According to market sources citing figures from the American Petroleum Institute, U.S. crude inventories witnessed a substantial decrease of 3.237 million barrels during the week ending April 19. This sharp drawdown defied analysts’ expectations, as six polled by Reuters had forecasted an increase of 800,000 barrels.
Traders eagerly await the official U.S. data on oil and product stockpiles, scheduled for release at 10:30 a.m. EDT (1430 GMT), to confirm the extent of the reported drawdown.
In other economic news, U.S. business activity decelerated in April, reaching a four-month low. S&P Global reported that its flash Composite PMI Output Index, which gauges activity in the manufacturing and services sectors, fell to 50.9 this month from 52.1 in March.
Analysts from ANZ expressed the belief that this economic slowdown could persuade policymakers to implement rate cuts in support of the economy. Lower interest rates have the potential to stimulate economic growth and, in turn, boost oil demand from the world’s largest consumer.
Meanwhile, analysts remain focused on the evolving situation in the Middle East, although its impact on oil supplies has been limited thus far. According to ING analysts, reports indicate that both Iran and Israel consider their recent operations against each other to be concluded, with no immediate follow-up actions expected.
Furthermore, the analysts noted that the U.S. and Europe are preparing new sanctions against Iran, but these may not have a significant impact on oil supply in the near term.
On Tuesday, Israeli strikes intensified across Gaza, representing some of the heaviest shelling in weeks. However, these developments have not yet translated into tangible disruptions to oil supply.
