By Adedapo Adesanya
On Tuesday, crude oil traded lower on signs of easing supply concerns, with Brent falling by 17 cents to close at $83.16 per barrel, and the US West Texas Intermediate (WTI) crude depreciating by 10 cents to finish at $78.38 a barrel.
Data from the American Petroleum Institute (API) showed a jump in US crude and fuel stocks last week, as inventories in the US, the largest oil producer, rose by 509,000 barrels for the week ending May 3 versus a 4.906 million barrel build in crude inventories in the preceding week.
Rising inventories, typically a sign of weak demand, have defied analysts’ expectations in recent weeks.
Official data from the US Energy Information Administration (EIA) is due later on Wednesday.
The EIA on Tuesday raised its forecasts for this year’s world oil and liquid fuels output and lowered its demand expectations, pointing to a well-supplied market as opposed to prior forecasts that showed under-supply.
The market also continued to weigh the possibility that the Organisation of the Petroleum Exporting Countries (OPEC) will continue its production cuts beyond June against uneventful economic data and geopolitical risks.
Traders largely looked past escalating tensions in the Middle East, where the Israeli military seized control of the Rafah border crossing between the Gaza Strip and Egypt and its tanks pushed into the southern Gazan town of Rafah.
This is as mediators struggled to secure a ceasefire agreement.
The US said negotiations on a Gaza ceasefire should be able to close the gaps between Israel and Hamas while Israeli forces seized the main border crossing in Rafah on Tuesday, closing a vital route for aid.
Hamas warned that if Israel’s military aggression continued in Rafah, there would be no truce agreement.
Any truce would be the first pause in fighting since a week-long ceasefire in November during which Hamas freed around half of the hostages and Israel released 240 Palestinians it was holding in its jails.
Since then, all efforts to reach a new truce have foundered over Hamas’ refusal to free more hostages without a promise of a permanent end to the conflict, and Israel’s insistence that it would discuss only a temporary pause.
According to market analysts, traders’ focus has shifted from the geopolitical happenings and appears directed towards the uncertainties surrounding global economic growth prospects and the anticipated impact of sluggish growth on oil demand.