Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Oil falls to 7-week low on surprise US storage build, Middle East hopes

Published 04/30/2024, 08:49 PM
Updated 05/01/2024, 03:21 PM
© Reuters. Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo
LCO
-
CL
-

By Scott DiSavino

NEW YORK (Reuters) -Oil prices fell about 3% to a seven-week low on Wednesday on a surprise build in U.S. crude stocks, the prospect of a Middle East ceasefire agreement and as hopes faded for near-term U.S. interest rate cuts that could boost oil demand.

Brent (LCOc1) futures for July delivery fell $2.89, or 3.4%, from where the July contract closed on Tuesday to settle at $83.44 a barrel on Wednesday.

That was down about 5.0% from where the Brent June contract closed on Tuesday when it was still the front-month, which would be the front-month's biggest daily percentage decline since October 2023.

U.S. West Texas Intermediate (WTI) crude fell $2.93, or 3.6%, to settle at $79.00 a barrel.

Those were the lowest closes for both benchmarks since March 12 and left both in technically oversold territory for the first time since December 2023.

In other energy markets, U.S. diesel futures closed at their lowest since July 2023, while U.S. gasoline settled at a seven-week low.

The U.S. Energy Information Administration (EIA) said energy firms added a surprise 7.3 million barrels of crude into stockpiles during the week ended April 26.

That compares with the 1.1 million barrel withdrawal analysts forecast in a Reuters poll and the 4.9 million barrel increase shown in data from the American Petroleum Institute (API), an industry group. [EIA/S] [EIA/S]

"The crude build is a big one. At this time of year, we should be drawing down on crude oil as more barrels go through the refinery," Bob Yawger, director of energy futures at Mizuho, told Reuters.

EIA also reported a surprise 0.3-million barrel build in gasoline inventories. Analysts expected gasoline stocks would decline by 1.1 million barrels.

In the Middle East, expectations grew that a ceasefire agreement between Israel and Hamas could be in sight following a renewed push by the U.S. and Egypt. Still, Israeli Prime Minister Benjamin Netanyahu has vowed to go ahead with a long-promised assault on the southern Gaza city of Rafah.

"The crude market is weighed down by continued hopes for a ceasefire," Ole Hansen of Saxo Bank said.

In other news, the U.S. accused Russia of violating the international chemical weapons ban by deploying the choking agent chloropicrin against Ukrainian troops and using riot control agents "as a method of warfare" in Ukraine.

U.S. INTEREST RATES

© Reuters. Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

The U.S. Federal Reserve held interest rates steady and signaled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings.

The Fed's latest policy statement did note that "inflation has eased" but any delay in rate cuts could slow economic growth and dampen demand for oil.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.