Oil prices weakened on Thursday morning as concerns about an escalating war in the Middle East eased, although tight supply and low inventories offered support.
West Texas Intermediate (CCOM:OILCRUDE) crude for November delivery last fell 17 cents to $87.61 per barrel, while December Brent (CCOM:OILBRENT) crude, the global benchmark , fell $0.80 to $90.70.
Prices soared on Wednesday after an explosion near a hospital in Gaza was initially reported to have killed hundreds of people, as outrage over the incident in Arab countries fueled concerns that war between Hamas and Israel would spread. in the Middle East and would threaten the region’s oil supply.
A larger-than-expected draw of 4.5 million barrels in U.S. inventories last week also contributed to Wednesday’s price rise, as supply at the Cushing, Oklahoma, storage hub, the delivery point of the WTI contract, fell 0.8 million barrels, to the lowest level since 2014. ..
“Oil rose again on Wednesday, amid geopolitical concerns that rose following the Gaza hospital bombing and official stockpile data showing US hubs’ highest inventories at 9-year lows. Once again, however “, the initial gap has closed, highlighting the difficulty of entering long positions based on a yet-to-be-realized supply disruption,” Saxo Bank noted.
Expected new supply from Venezuela also checks prices on Thursday. The Biden administration eased sanctions on the country’s oil exports in place since 2019, after the country’s government and its opposition agreed for the elections to be monitored by international observers. Bloomberg reported that the country, which has the largest oil reserves in the world, could add 200,000 barrels per day of new supply.