Oil prices creep lower amid mixed US inventories, easing risk premium By Investing.com

Oil prices creep lower amid mixed US inventories, easing risk premium By Investing.com

Investing.com– Oil prices edged lower in Asian trading on Thursday as traders steadily priced in a risk premium on crude amid easing geopolitical tensions in the Middle East, while mixed data on US stocks also provided poor readings.

expiring in June fell 0.2% to $87.88 per barrel, while it fell 0.2% to $82.66 per barrel as of 9:12 p.m. ET (01:12 GMT). Both contracts were falling sharply from near six-month highs over the past week.

Oil markets digest mixed US stocks

U.S. officials showed Wednesday that oil inventories fell by 6.4 million barrels in the week to April 19, largely dodging expectations of a 1.6 million barrel buildup.

But there was an unexpected increase of 1.6 million barrels, while a decrease of 0.6 million barrels was lower than expected.

Errors in product inventory data indicated that U.S. fuel markets remained relatively well-stocked, which, coupled with record production at home, weakened prospects for tighter oil markets.

Oil risk premium declines as Middle East tensions ease

But the biggest source of pressure on oil prices was the growing belief that recent hostilities between Iran and Israel would not escalate into all-out war.

While the two countries have carried out strikes against each other over the past two weeks, neither side has given the impression of wanting to escalate hostilities.

This caused traders to reduce expectations that worsening geopolitical tensions in the Middle East would disrupt oil supplies to the oil-rich region.

Even though the United States and its allies have announced tougher oil sanctions against Iran, it remains unclear to what extent these sanctions will be imposed, given that the Biden administration tries to avoid a rise in oil prices. oil and fuel ahead of the 2024 presidential elections.

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Other US economic indexes and rate signals are available

Weaker-than-expected U.S. data also weighed on oil prices this week as it heightened concerns that slowing economic growth in the world’s largest fuel consumer could dampen demand.

Further guidance on the US economy will be expected in the coming days, with first quarter data due later on Thursday.

The data – the Federal Reserve’s preferred inflation gauge – is due Friday and is expected to factor into the central bank’s interest rate outlook.

Weakening expectations for an anticipated interest rate cut by the Fed have also been a key point of pressure in oil markets in recent weeks.

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