International crude oil prices steadied on Tuesday, May 7, as easing supply concerns and signs of weakening demand countered fears of escalation in the Middle East. Traders largely looked past escalating tensions in the Middle East, where the Israeli military seized control of the Rafah border crossing between the Gaza Strip and Egypt and its tanks pushed into the southern Gazan town of Rafah, as mediators struggled to secure a ceasefire agreement.
Brent crude futures dropped 36 cents, or 0.4 per cent, to $82.97 per barrel, while the US West Texas Intermediate (WTI) crude futures were down 28 cents, or 0.4 per cent, to $78.20 a barrel. The first-month Brent contract’s premium to the six-month contract slipped to $2.81 a barrel, its lowest since mid-February, signaling easing worries about tight supplies, as per news agency Reuters.
Last week, Brent and WTI had their steepest weekly losses in three months as weak US jobs data fueled hopes for interest rate cuts by the US Federal Reserve. On the domestic front, crude oil futures last traded 0.84 per cent higher at ₹6,597 per barrel on the multi commodity exchange (MCX).
What’s dragging crude oil prices?
-Current inventory data shows crude oil and petroleum supplies are running 1.1 million barrel per day above forecasts in countries that are part of the Organization For Economic Co-operation and Development, according to an analysis by energy brokerage StoneX.
-Analysts said that crude traders seem to have developed a higher tolerance for geopolitical risk in the Middle East and its potential to disrupt the global oil supply. Instead, their focus appears directed towards the uncertainties surrounding global economic growth prospects and the anticipated impact of sluggish growth on oil demand.
-A stronger US dollar also weighed on oil prices, making crude more expensive for traders holding other currencies. Oil prices found some support after the US Department of Energy announced solicitations for up to 3.3 million barrels of oil for replenishment of the country’s Strategic Petroleum Reserve.
-The US Energy Information Administration will post its monthly short-term energy outlook on Tuesday. Its weekly update on stockpiles is due on Wednesday. US crude oil and product stockpiles were expected to have fallen last week. Crude inventories could have failed by about 1.2 million barrels in the week to May 3, based on analyst forecasts -.
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