Oil prices fluctuated, focusing on falling U.S. crude inventories and the conflict in the Middle East

(1) Oil prices fluctuated in a narrow range in the Wednesday session, temporarily holding overnight pump after industry data showed an unexpected drop in U.S. crude inventories last week, which is a positive sign of demand, although the market is also closely watching the situation in the Middle East. (2) Brent crude futures pumped 0.1% to $87.48 a barrel; U.S. West Texas Intermediate crude futures climbed 0.13% to $83.48 a barrel. (3) According to the American Petroleum Institute (API), crude inventories fell by 3.237 million barrels in the week ended April 19. Analysts had expected inventories to rise by 800,000 barrels. (4) Traders will pay attention to the inventory report released by the U.S. Energy Information Administration (EIA) at 22:30 on Wednesday to confirm whether the inventory has decreased significantly. (5) The pace of expansion in U.S. business activity fell to a four-month low in April, with S&P Global saying on Tuesday that its flash composite purchasing managers’ index (PMI), which tracks manufacturing and services, fell to 50.9 from 52.1 in March. ANZ’s team of analysts said in the note that “this could help convince policymakers that interest rate cuts are needed to support the economy” (6) U.S. interest rate cuts are likely to boost economic rise, which in turn boosts demand for oil in the world’s largest oil consumer. (7) Analysts remain optimistic that any latest developments in the Middle East conflict will still support markets, although the impact on oil supply remains limited for now. (8) “Overall, the continued risk premium in the Middle East provides a good support for crude oil prices at current levels. On the upside, the risk that OPEC may regain production from June will help limit the sharp upside in oil prices,” said Ong Jun Ho, head of strategy at Singapore’s United Overseas Bank, “We maintain our forecast for Brent oil prices to consolidate at $90/b by the end of the year,” it added. (9) Israel intensified its strikes on Gaza on Tuesday in the heaviest shelling in weeks. “Recent reports suggest that both Iran and Israel believe that the current long wick candle against each other is over and that there is no need for follow-up action for the time being,” ING ING analysts said in the report, adding that “the United States and Europe are preparing to impose new sanctions on Iran, although these sanctions may not have a significant impact on oil supplies in the short term”