Oil slips on higher US crude stocks, easing Middle East tensions

2:36 am Wednesday, August 21st, 2024

By Jeslyn Lerh

SINGAPORE (Reuters) -Oil prices slipped on Wednesday on estimates showing swelling U.S. crude inventories and expectations that tensions in the Middle East were easing following a tour of the region by mediators.

Brent crude futures fell 11 cents, or 0.1%, to $77.09 a barrel by 0630 GMT. U.S. West Texas Intermediate crude dipped 14 cents, or 0.2%, to $73.03.

U.S. crude oil stocks were seen rising last week by 347,000 barrels, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline and distillate stocks, however, fell by 1.043 million barrels and 2.247 million barrels respectively, according to the sources.

The United States is the world’s biggest producer and consumer of oil, and growing inventories point to oversupply that could pressure prices.

Official U.S. government inventory estimates are set to be released on Wednesday at 10:30 a.m.

Meanwhile, U.S. Secretary of State Antony Blinken wrapped up a trip to the Middle East intended to help broker a ceasefire agreement in Gaza.

Blinken and mediators from Egypt and Qatar have raised hopes for a U.S. “bridging proposal,” which could shrink the gaps between the two sides in the 10-month-old war.

“Hopes of a cease-fire between Israel and Hamas have weighed on oil, along with lingering demand concerns,” ING commodities strategists said.

“While weaker Chinese demand has been well reported, refinery margins around the globe have been under pressure for much of August, suggesting that these demand concerns are not isolated to just China,” they said.

The economic struggles in top crude importer China have continued to hobble the market, as weak processing margins and low fuel demand curbed operations at state-run and independent refineries.

Imports of crude oil from top supplier Russia fell in July by 7.4% from a year ago, while fuel oil imports retreated for a third straight month, customs data showed this week.

(Reporting by Laila Kearney in New York and Jeslyn Lerh in Singapore;Editing by Shri Navaratnam and Kim Coghill)