Investing.com– Oil prices fell slightly in Asian trade on Thursday as traders steadily priced out a risk premium from crude amid easing geopolitical tensions in the Middle East, while mixed U.S. inventory data also provided middling cues.
expiring in June fell 0.2% to $87.88 a barrel, while fell 0.2% to $82.66 a barrel by 21:12 ET (01:12 GMT). Both contracts were nursing a sharp tumble from near six-month highs over the past week.
Oil markets digest mixed US inventories
Official U.S. showed on Wednesday that oil stockpiles shrank by 6.4 million barrels in the week to April 19, largely ducking expectations for a build of 1.6 million barrels.
But saw an unexpected, 1.6 million barrel build, while shrank by a smaller-than-expected 0.6 million barrels.
The misses in the products inventory data indicated that U.S. fuel markets remained relatively well-supplied, which, along with record-high production in the country, dented the outlook for tighter oil markets.
Oil risk premium recedes as M.East tensions ease
But the biggest source of pressure on oil prices was growing conviction that recent hostilities between Iran and Israel will not escalate into all-out war.
While both countries carried out strikes against each other over the past two weeks, neither side gave any indication that it wanted to increase hostilities.
This saw traders wind down expectations that worsening geopolitical tensions in the Middle East will disrupt oil supplies from the oil-rich region.
While the U.S. and its allies did outline stricter oil sanctions against Iran, it remained unclear just to what extent that sanctions will be imposed, given that the Biden administration is trying to avoid higher oil and fuel prices ahead of the 2024 Presidential elections.
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More US economic cues, rate signals on tap
Unexpectedly softer-than-expected U.S. data also weighed on oil prices this week, as it ramped up concerns that easing economic growth in the world’s biggest fuel consumer will stymie demand.
More cues on the U.S. economy were due in the coming days, with data for the first quarter due later on Thursday.
data- the Federal Reserve’s preferred inflation gauge- is due on Friday and is expected to factor into the central bank’s outlook on interest rates.
Waning expectations of early interest rate cuts by the Fed were also a key point of pressure on oil markets in recent weeks.
