Oil prices settle lower on jitters about growing crude supplies


Investing.com– Oil prices settled lower Thursday as jitters about growing non-OPEC output, led by the U.S., following a jump in crude stockpiles to the highest level since July, overshadowed concerns that an attack on Israel by Iran is imminent. 

At 14:30 EST (18:30 GMT),  fell 1.4% to settle at $85.02 a barrel, while brent oil futures expiring in June fell 0.8% to $89.74 a barrel.

Middle East tensions support oil prices amid fears of imminent Iran attack  

“The market has become increasingly concerned that the Israel-Hamas war could escalate across the Middle East, putting oil supply at risk,” ANZ Research in a recent note. 

Geopolitical tensions in the middle east remain on edge following a Bloomberg report a day earlier that Iran is planning to retaliate against Israel following an attack on its consulate building in Syria.   

But while geopolitical tensions are expected to continue to support oil prices, Macquarie says, that further upside is challenging without an actual supply disruptions as a result of geopolitical events, Macquarie said. 

“[W]e think it will be difficult to maintain above $90 into 2H24 without actual supply disruption associated with geopolitical events,” Macquarie said in a recent note.  

US oil inventories grow more than expected amid record output

Official data on Wednesday showed U.S. grew 5.8 million barrels in the week to April 5, much more than expectations for a build of 0.9 million, keeping supplies at the highest level since July. 

The build marked a third consecutive week of outsized growth in U.S. inventories, while an unexpected build in also pointed to some cooling in fuel demand.

The jump in non-OPEC output let by the U.S. could potentially trigger a reversal in oil prices in the second half of the year, Macquarie warned, when the added supply growth threat of OPEC+ spare capacity could enter the market.