Crude oil prices, which had been on the rise earlier this week, retreated partially following a report of an inventory build in the United States that traders apparently did not expect as well as uncertainty surrounding geopolitical developments in the Middle East.
At the time of writing, Brent crude was trading at $64.82 per barrel and West Texas Intermediate was changing hands for $61.50 per barrel, both down from Wednesday’s close.
The dip followed the U.S. Energy Information Administration’s latest weekly inventory report, released yesterday, which revealed builds across the board. Crude oil inventories added 1.3 million barrels, the EIA said, and gasoline and middle distillates rose by 800,000 barrels and 600,000 barrels, respectively. Despite the modest build in fuel inventories, the trajectory pressured oil benchmarks.
“While rising U.S. inventories have raised concerns, some investors expect the summer driving season starting after Memorial Day weekend to draw down stocks, limiting further downside,” Nissan Securities analyst Hiroyuki Kikukawa told Reuters.
According to Bloomberg, the prospect of an end to the war in the Ukraine and the “fast-faltering nuclear talks” between Washington and Tehran also applied downward pressure on oil prices. Both developments would have bearish implications for oil prices, indeed. However, both of them are far from guaranteed in the immediate term.
Earlier in the week, prices moved higher on reports that Israel’s government had plans for direct strikes on Iranian nuclear facilities. The reports were attributed by CNN to U.S. intelligence community members and government officials, one of whom told the media that the likelihood of such strikes “has gone up significantly in recent months.” The news report about these plans pushed oil 1% higher.
The next round of U.S-Iran talks begins tomorrow in Rome. The outcome remains uncertain as the two sides appear to still have irreconcilable differences with regard to Iran’s nuclear plans.
By Irina Slav for Oilprice.com
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