By Laura Sanicola
(Reuters) -Oil prices fell 3% on Wednesday, pressured by a rise in U.S. commercial inventories, weaker economic data from China and U.S. progress on aid bills for Ukraine and Israel.
futures for June fell $2.73, or 3%, to $87.29 per barrel, while futures for May fell $2.67, or 3.1%, to $82.69 per barrel, their biggest decline since March 20.
Oil prices have softened this week as economic headwinds curb gains from geopolitical tensions, with markets eyeing how Israel might respond to Iran’s attack this weekend.
Analysts do not expect Iran’s unprecedented missile and drone attack on Israel to lead to dramatic US sanctions on Iranian oil exports.
US crude inventories rose by 2.7 million barrels to 460 million barrels last week, government data showed. This is almost double analyst expectations in a Reuters poll for an expansion of 1.4 million barrels. [EIA/S]
Oil prices continued to fall after US House of Representatives Speaker Mike Johnson said the text of four bills supporting Ukraine, Israel and the Indo-Pacific would be introduced “soon today”, while a fourth with “other measures to to confront Russia, China and China.” and Iran” posted later in the day.
“The market was waiting for a sell-off on indications that tensions in the Middle East would ease… the progress of these bills and a three-day delay in Israel’s response to Iran are helping today,” said John Kilduff, partner at Again Capital LLC. in New York City.
Top Federal Reserve officials, including Chairman Jerome Powell, on Tuesday refrained from providing guidance on when interest rates could be cut, dashing investors’ hopes for a meaningful reduction in borrowing costs this year.
British inflation slowed less than expected in March, indicating that a first rate cut by the Bank of England could also be further away than previously thought.
However, inflation slowed across the eurozone last month, reinforcing expectations for a rate cut by the European Central Bank in June.
“A strengthening trend in the U.S. dollar and the ability of crude oil inventories to rise in light of reduced Mexican imports and increasing SPR replenishments are also creating some bearish vibes,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, IL. .
In China, the world’s biggest oil importer, the economy grew faster than expected in the first quarter, but several other indicators showed domestic demand remains weak.
Elsewhere, Tengizchevroil announced plans for scheduled maintenance on one of six production trains at Kazakhstan’s Tengiz oil field in May.
