Oil slips on rising US stockpiles and strong dollar

Singapore — Oil prices fell on Thursday after a rise in US crude stockpiles and a climb in the dollar index, giving up some ground gained a day earlier when prices jumped on Middle East tensions.

Brent crude futures declined by 28c, or 0.3%, to $89.95 a barrel at 3.40am GMT, while US West Texas Intermediate (WTI) crude futures eased 18c, or 0.2%, to $85.21 a barrel.

The benchmark oil contracts had settled nearly 2% higher on Wednesday, but fell back after the Wall Street Journal (WSJ) reported that Israel has agreed to delay an expected invasion of Gaza for now.

“The movements of oil markets are primarily involved with the Hamas-Israel war,” said Tina Teng, markets analyst at CMC.

Investors were also digesting a rise in US crude inventories, indicative of weak demand.

US crude inventories climbed by 1.4-million barrels in the latest week to 421.1-million barrels, according to the Energy Information Administration (EIA), exceeding a 240,000-barrel gain expected by analysts from a Reuters poll.

“Markets remain volatile as Middle East jitters ebb and flow, but underlying fundamentals are seasonally weaker than expected, with product demand in the US surprisingly weak,” Citi analysts said on Thursday.

Refinery crude runs in the US fell by 207,000 barrels per day, while refinery utilisation rates also edged lower by 0.5 percentage points to 85.6% of total capacity, EIA data showed.

Macroeconomic concerns continued to weigh on the outlook for oil demand as eurozone business activity data took a surprise downturn this month.

The dollar index was also up slightly on Thursday, which helps pressure oil prices. A stronger dollar dampens oil demand as it makes the commodity more expensive for those holding other currencies.

Reuters