Written by Nicole Zhao
NEW YORK (Reuters) – Oil prices fell slightly on Wednesday as concerns over Middle East conflict receded and business activity slowed in the world's biggest oil consumer, but a decline in U.S. crude inventories offset the loss. It was set as the lower limit.
By 11:30 a.m. EDT (1530 GMT), Brent crude futures were down 27 cents, or 0.31%, at $88.15 per barrel, while U.S. West Texas Intermediate crude futures were down 38 cents, or 0.46%. ) fell to $82.98.
This reversed some of the gains in Brent earlier in the week supported by a weaker dollar. [USD/]
“The fundamentals that we trade on seem to be settling down a little bit in the Middle East,” said Tim Snyder, an economist at Matador Economics.
Analysts at Goldman Sachs said in a note that easing tensions between Iran and Israel could lead to further declines of $5 to $10 per barrel in the coming months.
U.S. crude oil inventories fell by 6.4 million barrels to 453.6 million barrels in the week ending April 19, the EIA said, compared to an increase of 825,000 barrels over analysts' expectations in a Reuters poll.[EIA/s]
UBS analyst Giovanni Staunovo said the large influx of oil was the result of very high oil exports. However, he said this could be a one-off, as preliminary tanker tracking data this week shows a decline in exports.
U.S. business activity cooled to a four-month low in April, and S&P Global said Tuesday that its preliminary Composite PMI Production Index, which tracks the manufacturing and services sectors, was at 50.9 this month, down from 52.1 in March. .
Lower interest rates in the United States could boost economic growth and, in turn, stimulate oil demand.
Elsewhere, business morale in Germany improved more than expected in April, according to a survey on Wednesday, raising hopes that the worst may be over for Europe's biggest economy.
Even as concerns over geopolitical tensions in the Middle East subside, the conflict between Israel and Hamas continues to escalate, with Tuesday's heaviest shelling in recent weeks. Sources said on Wednesday that Israel was preparing to evacuate Rafah ahead of a promised attack on the city.
(Reporting by Nicole Zhao in New York, Robert Harvey in London, Deep Vakil in Bengaluru, Katya Golubkova in Tokyo and Trixie Yap in Singapore; Editing by Kirsten Donovan, Alexandra Hudson and Andrea Ricci)
