The price of oil dropped slightly on Wednesday due to a calming down in the Middle East and slowing business activity worldwide. However, a decline in U.S. crude oil inventories helped limit these losses. Brent crude futures fell 27 cents to $88.15 a barrel by 11:30 a.m. EDT, while U.S. West Texas Intermediate crude futures dropped 38 cents to $82.98.
The reversal of some of Brent’s earlier gains was driven by weaker U.S dollar and economist Tim Snyder from Matador Economics noted that the fundamentals suggest that this could be an opportunity for the market to recover, potentially removing $5-10 a barrel in the coming months. The UBS analyst Giovanni Staunovo pointed out that the large crude draw was due to very high crude exports, although preliminary tanker tracking data showed lower exports than expected in the week ended April 19th, which is different from what analysts had forecasted for an 825,000-barrel rise in stockpiles .
On the other hand, despite easing concerns about geopolitical tension in the Middle East, Israel’s conflict with Hamas continues to escalate with heavy shelling reported on Tuesday and sources indicated that Israel is preparing to evacuate Rafah ahead of an expected assault on the city which may cause more uncertainty for investors and market sentiment going forward . At the same time Germany’s business morale improved more than anticipated in April, offering hope that Europe’s biggest economy might be turning around after its recent slowdown which can have positive impact on global oil demand if sustained over time
