Oil prices fell on Wednesday, April 10, after US government data showed earlier today that crude oil and fuel inventories rose by much more than expected on weak demand and lower oil exports. US crude stocks climbed by 5.8 million barrels in the week ended April 5, more than double of analysts’ expectations.
Brent crude futures dropped 28 cents, or 0.3 per cent, to $89.14 per barrel, while US West Texas Intermediate (WTI) crude futures fell 35 cents, or 0.4 per cent, to $84.88. In the previous session, both Brent and WTI fell more than one per cent. Coming to domestic prices, crude oil futures last traded 0.18 per cent higher at ₹7,115 per barrel on the multi commodity exchange (MCX) platform.
What’s dragging crude oil prices?
-Refined products inventories rose unexpectedly with gasoline up by 700,000 barrels and distillate stocks by 1.7 million barrels. The US Energy Information Administration (EIA) data also showed a 2.1 million barrel per day (bpd) drop in oil product supplied, a proxy for fuel demand, and a 2.7 million bpd drop in crude oil exports.
-Separately, the US EIA sharply raised its forecast for crude oil output. It now expects an increase of 280,000 bpd to 13.21 million bpd in 2024 – which is higher from its earlier forecast of a 20,000 bpd increase in output.
-The commander of the Revolutionary Guard’s navy in Iran said it could close the Strait of Hormuz if necessary. About a fifth of the volume of the world’s total oil consumption passes through the strait daily.
-On Tuesday, Hamas said that an Israeli proposal on a ceasefire did not meet demands of Palestinian militant factions, but it would study the offer further and deliver its response to mediators, according to news agency Reuters.
-A continuing conflict in the Middle-East could drag in other countries, particularly Hamas-backer Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC) cartel, led by Saudi Arabia.
Where are oil prices headed?
The EIA said it expects Brent crude prices to average $88.55 a barrel in 2024, up from a previous forecast of $87, and it upgraded its demand growth forecast for the past two years.
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