Oil Prices Dip Despite Middle East Tensions, U.S. Crude Inventories Help Limit Losses

Due to decreased worries over conflict in the Middle East and slowing business activity in the world’s largest oil consumer, oil prices dropped slightly on Wednesday. However, a decline in U.S. crude oil inventories helped limit these losses. Brent crude futures fell 27 cents to $88.15 a barrel by 11:30 a.m. EDT, while U.S. West Texas Intermediate crude futures dropped 38 cents to $82.98.

Brent’s earlier gains this week were driven by a weaker U.S. dollar, but there was a reversal of some of those gains as economists noted that the fundamentals suggested a calming down in the Middle East, potentially removing $5-10 a barrel from the market in the coming months. The large crude draw was due to very high crude exports, although preliminary tanker tracking data showed lower exports than expected in April as US business activity cooled down and reached its lowest point for four months with Composite PMI Output Index falling to 50.9 from 52