By Adedapo Adesanya
The oil market fell on Wednesday as worries over conflict in the Middle East eased and business activity in the United States slowed, with Brent crude futures losing 40 cents or 0.45 per cent to settle at $88.02 a barrel, and the US West Texas Intermediate (WTI) crude futures down by 55 cents or 0.66 per cent to $82.81 per barrel.
This reversed some of Brent’s gains earlier in the week, buoyed by a weaker US Dollar.
The ease in previously high tension in the Middle East has led traders to see calmness ahead.
According to investment bank, Goldman Sachs, the perceived de-escalation between Iran and Israel could remove another $5-10 a barrel in coming months. Its analysts also estimated a $90 per barrel ceiling for Brent.
However, as concerns about geopolitical tension in the Middle East eased, the Israel-Hamas conflict continues to rage.
Reports on Wednesday said Israel was preparing to evacuate Rafah ahead of a promised assault on the city.
The US business activity cooled in April to a four-month low, with S&P Global saying on Tuesday that its flash Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 50.9 this month from 52.1 in March.
The US central bank, the Federal Reserve, is expected to start lowering rates this year, which could bolster economic growth and, in turn, stimulate demand for oil.
Also, Germany’s business activity improved more than expected in April, according to a survey on Wednesday, boosting hopes in Europe’s biggest economy.
Meanwhile, the US Energy Information Administration (EIA) reported an estimated decline of 6.4 million barrels in inventories for the week to April 19.
This compared with an inventory build of 2.7 million barrels for the previous week, which pressured prices last week.
It also compared with an inventory draw of 3.23 million barrels as estimated by the American Petroleum Institute on Tuesday, with the group also reporting a gasoline inventory decline of about half a million barrels.
