Oil Prices Dip After Reaching Seven-Week Highs Amid Demand Hopes and Geopolitical Tensions.
Oil prices experienced a slight dip on Wednesday after achieving seven-week highs, driven by optimism over summer demand and concerns regarding escalating geopolitical conflicts. This comes despite an industry report indicating an unexpected rise in U.S. crude inventories.
Brent crude futures decreased by 6 cents, or 0.1%, to $85.27 a barrel by 19:43 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude fell by 10 cents, or 0.1%, to $81.47 per barrel. Earlier in the session, Brent had peaked at $85.84, its highest since May 1, while WTI had reached $81.96, the highest since April 30.
Trading volumes were low due to a U.S. federal holiday.
“The current snapshot presents an underwhelming picture but there are green shoots that indicate a more optimistic outlook,” stated Tamas Varga of oil broker PVM. Varga noted that Brent’s price being $8 higher than the lows seen in early June “shows genuine optimism that the global oil balance will eventually tighten.”
Both benchmarks have shown strong recovery over the past two weeks, gaining more than $1 in the previous session following a Ukrainian drone strike that caused a fire at a major Russian oil terminal.
In the Middle East, Israeli Foreign Minister Israel Katz issued a warning of a potential “all-out war” with Lebanon’s Hezbollah, while the U.S. continued efforts to prevent a broader conflict between Israel and the Iran-backed group. An escalation in this region poses a risk of supply disruption from key oil-producing areas.
“The potential escalation of tensions in the Middle East is adding some supply risk to the oil demand equation,” commented Bart Melek, head of commodity strategy at TD Bank. He added that recent U.S. economic data supports the expectation that the Federal Reserve might move towards cutting interest rates in the coming months.
Meanwhile, data from China this week showed that May industrial output fell short of expectations, though retail sales, a measure of consumption, recorded the fastest growth since February.
Related Posts
U.S. crude inventories rose by 2.264 million barrels for the week ending June 14, according to market sources citing American Petroleum Institute figures. Analysts polled by Reuters had anticipated a 2.2-million-barrel draw in crude stocks. However, gasoline inventories decreased by 1.077 million barrels, while distillate stocks increased by 538,000 barrels, the sources added, speaking on the condition of anonymity.
The official inventory data from the U.S. Energy Information Administration is expected on Thursday.
