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Oil price slips on higher US crude stockpiles

Oil storage tanks in Bayonne, New Jersey. US crude stocks rose five times higher last week than analysts' predictions Alamy via Reuters
Oil storage tanks in Bayonne, New Jersey. US crude stocks rose higher last week than analysts' predictions
  • 1.64m barrels added last week
  • Concerns over Chinese demand
  • Concerns over Middle East conflict

Oil prices fell on Wednesday after industry data showed US crude inventories swelled more than expected, though futures were still up about 2 percent this week as traders factored in continuing conflict in the Middle East.

Brent crude futures dropped $1.40, or 1.8 percent, to $74.64 a barrel by 11:07 GMT. US West Texas Intermediate crude futures also shed $1.40, or 2 percent, to $70.34.

Oil had settled higher in the previous two sessions, paring last week’s losses of more than 7 percent. Those declines stemmed from worries about Chinese demand and some easing concerns around Middle East oil supply being disrupted.

Wednesday’s price drop came after data showed US crude stocks rose by 1.64 million barrels last week, according to market sources citing American Petroleum Institute figures on Tuesday. Analysts polled by Reuters had expected an increase of 300,000 barrels.

But the inventories impact on prices was countered somewhat by persistent concerns over potential oil supply risk from conflict in the Middle East.

“The market continues to wait for Israel’s response to Iran’s missile attack,” ING analysts said on Wednesday, adding that Tuesday’s price strength was possibly because of the lack of any outcome from US secretary of state Antony Blinken’s latest visit to Israel.

Blinken pushed on Wednesday for a halt to fighting between Israel and militant groups Hamas and Hezbollah, but heavy Israeli air strikes on a large historic Lebanese port city demonstrated that there was no respite.

Israel on Tuesday also confirmed it had killed Hashem Safieddine, the heir apparent to late Hezbollah leader Hassan Nasrallah, who was killed last month in an Israeli attack targeting the Iran-backed Lebanese militant group.

“Market participants priced for the Middle East conflict to drag for longer, with a ceasefire deal potentially seeing some gridlock,” said IG market strategist Yeap Jun Rong.