Oil prices experienced a slight decline in Asian trade on Wednesday, influenced by signs of a significant weekly build in U.S. inventories and a potential ceasefire between Israel and Hamas. While optimism persisted over potential supply cuts by OPEC+ until the end of 2024, it was offset by industry data indicating a substantial increase in U.S. oil inventories.
Brent oil futures for April delivery fell by 0.4% to $83.31 a barrel, while West Texas Intermediate crude futures dropped by 0.3% to $78.58 a barrel.
The American Petroleum Institute (API) reported a notable growth of 8.4 million barrels in U.S. crude oil inventories for the week ending February 22, surpassing analysts’ expectations of a 1.8 million-barrel build. The data suggests that U.S. markets remain well-supplied despite record-high production and modest fuel consumption.
The API data, which often aligns with official inventory data, has recently diverged, making markets await the official figures later in the day.
Additionally, the strength of the U.S. dollar, as markets positioned for key PCE price index data to gauge U.S. inflation and interest rates, contributed to the pressure on crude prices.
In terms of geopolitical factors, U.S. President Joe Biden announced that Israel had agreed to a ceasefire in Gaza for over a month during the Muslim holy month of Ramadan. While Israeli and Hamas officials downplayed the comments, they were also reportedly studying a new ceasefire proposal presented by the U.S., Qatar, and Egypt in Paris.
The ongoing conflict in the Middle East and attacks by the Yemeni Houthis on vessels in the Red Sea have provided support to oil prices, with concerns about potential disruptions to global oil supplies.