Crude oil futures slumped in the middle of the trading week as renewed demand concerns weighed on energy commodities. Oil prices had been on a tear this year but have experienced a pullback in recent sessions following Iran’s failed aerial assault on Israel. But while geopolitical tensions ease, market watchers still believe supply concerns should be more prevalent across energy markets.
May West Texas Intermediate (WTI) crude oil futures tumbled $0.52, or 0.61%, to $84.84 per barrel at 14:59 GMT on Wednesday on the New York Mercantile Exchange. US crude prices have slumped about 1.6% this week but remain up around 19% year-to-date.
Brent, the international benchmark for oil prices, fell below $90 midweek. June Brent crude futures dropped $0.87, or 0.97%, to $89.15 a barrel on London’s ICE Futures exchange. Brent is also down 1.6% this week and up nearly 16% so far this year.
According to the US Energy Information Administration (EIA), domestic inventories of crude oil increased by 2.735 million barrels for the week ending April 12, down 5.841 million barrels in the previous week. The consensus estimate was a build of 1.6 million barrels.
Gasoline inventories declined by 1.154 million barrels, down from the previous week’s increase of 715,000 barrels. Distillate stockpiles declined by 2.76 million barrels while heating oil supplies decreased by 714,000 barrels.
Meanwhile, commodity traders have discounted the Iran-Israel war risk, and some of the premiums are dissipating, market watchers say. Oil prices have simmered down as tensions in the Middle East have diminished as Israel has ostensibly heeded calls to show restraint.
Iranian President Ebrahim Raisi stated that if Israel launched a counterattack, Tehran would retaliate with a “massive and harsh” response.
The US confirmed this week that the White House is preparing to announce new sanctions against Iran. It is unclear if Washington plans to impose restrictions on Tehran’s oil exports.
In other energy commodities, May natural gas futures dropped $0.06, or 3.46%, to $1.672 per million British thermal units (Btu). May gasoline futures fell $0.0442, or 1.57%, to $2.7788 a gallon. May heating oil futures tumbled $0.0165, or 0.62%, to $2.6413 per gallon.