Crude Oil Prices Slip As U.S. Stockpile Surge; Middle East Tension Persist

Mumbai, 27 Jun (Commoditiescontrol): Crude oil prices declined in early Asian trading on Thursday, driven by an unexpected increase in U.S. stockpiles, which heightened concerns about sluggish demand from the world's top oil consumer. However, potential disruptions to Middle East supplies due to escalating conflicts in Gaza limited the price drop.

Brent crude futures fell by 30 cents, or 0.4%, to $84.17 a barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped 32 cents, or 0.4%, to $80.58 per barrel. This decline followed a slight uptick in both benchmarks on Wednesday.

The U.S. Energy Information Administration (EIA) reported a surprising 3.6 million barrel increase in crude oil stocks last week. Analysts had anticipated a 2.9 million-barrel reduction. Additionally, U.S. gasoline stocks rose by 2.7 million barrels, contrary to the expected 1 million-barrel drawdown.

Demand indicators also showed weakness, with product supplied for motor gasoline, a proxy for demand, falling by approximately 417,000 barrels per day last week, bringing the total to 8.97 million bpd. The four-week average demand is about 2% lower than the same period last year. According to analyst Ueno, this weak consumption during the peak U.S. summer driving season has caused concern among traders.

In the Middle East, tensions have been rising, particularly between Israel and Lebanon's Hezbollah. The possibility of an all-out conflict involving major regional powers, including oil producer Iran, has stoked fears of supply disruptions. Turkish President Tayyip Erdogan expressed solidarity with Lebanon and urged support from regional countries.

Meanwhile, Israeli forces conducted heavy bombardments across Gaza on Wednesday, with reports of intense overnight fighting in Rafah, located in the southern part of the Palestinian enclave.

The ongoing geopolitical instability in the Middle East continues to be a significant factor for oil markets, influencing traders' sentiments and price movements.

(By Commoditiescontrol Bureau: 09820130172)