Oil prices fell in Asian trading as investors weighed signs of market tightening against persistent concerns about demand.
After rising 1.6% in the past two sessions, Brent fell towards $83 a barrel, with prices at the upper end of a narrow range. West Texas Intermediate traded around $78. U.S. crude oil inventories increased less than expected last week, although time spreads indicate a firmer market.
Oil is caught between bullish tailwinds from OPEC+ production cuts and rising tensions in the Middle East, and concerns about the consumption outlook in China, its biggest importer. As a result, futures prices have occasionally taken their cues from broader stock market movements.
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“The combination of ample oil demand and weak Chinese macroeconomic indicators is a recurring theme,” RBC Capital Markets LLC analyst Michael Tran said in a note. “So far, the basic signals are mixed.”
Attacks by Houthi militants on commercial ships in the Red Sea have increased risk premiums in oil futures. The group and its Iranian backers are bracing for a prolonged conflict with the United States and its allies over the waterway, regardless of the outcome of the Israel-Hamas war.
US crude oil inventories did not increase as much as expected, but they are still increasing for the fourth straight week. Inventories in Cushing, Oklahoma, the delivery point for WTI futures, also increased for the second straight week, but remain below seasonal averages.
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