Oil Prices Fluctuate as Middle East Conflict and Global Business Activity Concerns Subside; US Crude Inventories Help Limit Decline

On Wednesday, oil prices dropped slightly due to decreased worries about conflict in the Middle East and slowing business activity in the world’s largest oil consumer. However, a decline in U.S. crude oil inventories helped limit these losses. Brent crude futures fell 27 cents to $88.15 a barrel by 11:30 a.m. EDT, while U.S. West Texas Intermediate crude futures dropped 38 cents to $82.98.

In the week ended April 19, U.S. crude stockpiles saw a significant drop of 6.4 million barrels to 453.6 million barrels, against analysts’ expectations for an 825,000-barrel rise. The large crude draw was due to very high crude exports, although preliminary tanker tracking data showed lower exports than expected in March and April respectively due to concerns over COVID-19 outbreak and increasing uncertainty around global demand for oil as more countries announced lockdowns and travel restrictions with no clear end date yet in sight despite easing of some restrictions around the world particularly in Europe and USA with Germany’s business morale improving more than anticipated in April offering hope that the worst might be over for Europe’s biggest economy though conflicts such as Israel-Hamas continue to escalate with heavy shelling reported on Tuesday as Israel is preparing to evacuate Rafah ahead of an expected assault on the city which could negatively impact further recovery of global economic growth and increase demand for oil despite possibility of US interest rate cuts that could stimulate economic growth and increase demand for oil if it happens soon enough before the situation worsens again or becomes irreversible due to new COVID-19 variants emerging globally