Oil prices were little changed on Thursday as fuel demand fell in the United States, the world’s biggest oil consumer and signs of a slowing economy were limited by concerns about widening conflict in the Middle East.
Brent crude futures were up 9 cents at $88.11 a barrel at 04:20 GMT, after falling 0.5 percent in the previous session.
West Texas Intermediate (WTI) crude oil futures for June rose 7 cents to $82.88 a barrel, following Wednesday’s 0.6 percent decline.
Data from the U.S. Energy Information Administration (EIA) on Wednesday showed gasoline demand fell 2.8% in the week to April 19 from a week earlier and 11% from a year ago. Distillate fuel demand also decreased from a week ago, falling 4.7% from a year ago.
The drop in fuel demand comes as there are signs of US business activity cooling in April, and as stronger-than-expected inflation and employment data mean the US Federal Reserve is more likely to delay expected interest rate cuts, weighing on economic sentiment.
The weakness in benchmark prices, which are testing $90 per barrel levels, is due to market sentiment refocusing on global economic headwinds due to geopolitical tensions.
Geopolitics aside, prices this quarter will be affected by factors such as major producer supply disruptions, economic data from China and the Eurozone, and rising demand expectations as the Northern Hemisphere enters summer.
A clearer picture of the Fed’s interest rate intentions will be seen after the release of U.S. gross domestic product and March personal consumption expenditures data on Thursday and Friday.
Meanwhile, the conflict between Israel and Hamas in the Gaza Strip is likely to expand as Israel could launch an offensive on Rafah in the south of the territory. In this case, the possibility of a wider war that could potentially disrupt the Middle East’s oil supplies could increase.
But there have been no other signs of direct conflict between Israel and Iran, a major oil producer and supporter of Hamas, since last week.
Tensions between Iran and Israel have eased, but that doesn’t mean Israeli attacks on Gaza won’t worsen, and the risk of conflicts spreading to neighboring countries is supporting oil prices.
Other EIA data on Wednesday showed U.S. oil stockpiles fell unexpectedly last week as exports rose, while gasoline stockpiles fell less than forecast.
EIA stated that crude oil stocks fell by 6.4 million barrels to 453.6 million barrels, compared to survey expectations for an increase of 825,000 barrels.
