Investing.com– Oil prices fell slightly in Asian trade on Wednesday as signs of a large weekly build in U.S. inventories pointed to less tight markets, although concerns over Israel’s response to an attack by Iran still remained in play.
Crude prices saw a stellar run-up over the past two weeks as the prospect of a bigger conflict in the Middle East, especially between Iran and Israel, sparked bets of supply disruptions in the region.
But this rally stalled in recent sessions, with prices coming under pressure from strength in the dollar and concerns that weak economic conditions could dent oil demand in 2024.
Brent oil futures fell 0.1% to $89.89 a barrel, while West Texas Intermediate crude futures fell 0.2% to $84.69 a barrel by 20:58 ET (00:58 GMT). Both contracts were trading well below over five-month highs hit last week.
US inventories grow 4.09 mln barrels, more than expected- API
Data from the American Petroleum Institute (API) showed on late-Tuesday that U.S crude inventories rose 4.09 million barrels in the week to April 12, much more than expectations for a build of 600,000 barrels.
The build came after a 3.03 million barrel rise in the prior week, and was largely driven by U.S. production remaining at record highs above 13 million barrels per day. Record-high production largely offset increasing refinery activity, driving concerns that U.S. oil markets were not as tight as initially thought.
Still, a drop in gasoline inventories, of about 2.5 million barrels, indicated that demand in the world’s biggest fuel consumer was picking up with the approaching summer season.
The API data usually heralds a similar reading from official U.S. inventory data, which is due later in the day.
Middle East tensions, rate fears remain in play
Oil prices fell from over five-month highs in recent sessions even as geopolitical tensions in the Middle East worsened, as a spike in the dollar- on expectations of higher-for-longer interest rates- weighed on international demand.
Markets also feared that restrictive monetary policy could further stymie demand in 2024, especially with economic growth already seen cooling. Mixed economic data from China added to these concerns.
But oil prices were still relatively underpinned by fears that a worsening conflict in the Middle East will stem supply. Markets were focused squarely on Israel’s response to a drone and missile attack by Iran over the weekend, with reports suggesting retaliation was imminent.
