Crude remains stable as US demand worries balance Risks of a Middle East war

Crude remains stable as US demand worries balance Risks of a Middle East war

The U.S. Energy Information Administration (EIA) released its supply report for this week on Wednesday. It indicated that although distillate stocks increased despite predictions of a fall, gasoline stockpiles fell less than expected, indicating symptoms of weakening demand.

Following a day of lower oil prices, oil prices stabilized on Thursday as growing Middle East war concerns and signals of declining gasoline consumption in the United States, the world's largest oil consumer, clashed.

The U.S. Energy Information Administration (EIA) released its supply report for this week on Wednesday. It indicated that although distillate stocks increased despite predictions of a fall, gasoline stockpiles fell less than anticipated, indicating symptoms of weakening demand. [S/EIA]

According to John Evans of oil broker PVM, "it does not exactly give a healthy state of domestic demand in the U.S." Evans also mentioned that mood will be impacted by U.S. economic data that was released later in the day. "Oil prices today will not be in the hands of the oil market," he said.

By 1005 GMT, U.S. West Texas Intermediate oil prices were down 7 cents, or 0.1%, at $82.74, while Brent crude futures lost 4 cents, or 0.1%, to $87.98 a barrel.

According to the EIA data, U.S. oil stockpiles unexpectedly dropped last week while exports increased.

Stronger-than-expected job and inflation numbers raise concerns about the United States' fuel consumption as well as indications of a slowdown in economic activity in April, which increases the likelihood that the Federal Reserve will postpone its planned interest rate reductions.

First-quarter GDP growth is one of the U.S. economic figures that will be released on Thursday. Based on a Reuters poll of analysts, the GDP rose at an annualized rate of probably 2.4%.

Emril Jamil, senior oil analyst at LSEG Oil Research, said, "Market sentiment is refocusing on global economic headwinds over geopolitical tensions, which is the reason for the current weakness in benchmark prices, after testing above $90 levels."

Israel's possible attack on Rafah, in the southern enclave, might escalate fighting between Israel and Hamas in the Gaza Strip and raise the possibility of a larger conflict that would interrupt oil supplies.

However, since last week, there have been no more indications of a direct battle between Iran, a major oil producer and supporter of Hamas, and Israel, affecting the supply of oil.