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Oil prices saw a slight decline on Wednesday after an unexpected rise in US crude inventories and a reduction in concerns over potential disruptions in the Middle East.
Market Movement
- Brent Crude Futures: Fell by 41 cents (0.5%), reaching $80.28 per barrel by 1436 GMT.
- US West Texas Intermediate (WTI) Crude Futures: Dropped by 55 cents (0.7%), settling at $77.77 per barrel.
The decline followed a report from the US Energy Information Administration showing a 1.4 million barrel increase in crude inventories, contrasting with expectations of a 2.2 million barrel decrease. However, gasoline and distillate inventories fell more than anticipated, which could influence future price movements.
Recent Developments
Earlier this week, Brent crude had seen a significant increase, rising over 3% and closing at $82.30 per barrel after hitting a seven-month low of $76.30. The rise was driven by concerns over potential conflicts in the Middle East, particularly following Iran’s response to the assassination of a Hamas leader. However, tensions have slightly eased with diplomatic efforts in the region.
The US has responded to the situation by deploying naval assets to the Middle East, though a ceasefire in Gaza may reduce the risk of further escalation.
Market Outlook
Dennis Kissler, Senior Vice President of Trading at BOK Financial, noted that the tighter supply situation had already been factored into current prices. Additionally, the International Energy Agency (IEA) and OPEC have both revised down their forecasts for oil demand in 2024 and 2025, citing a weakened Chinese economy as a significant factor.
China’s economic performance in July has been weaker than expected, adding to the bearish sentiment in the oil market.
