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Investing.com– Oil prices fell slightly in Asian trade on Wednesday, coming under pressure from signs of a massive weekly build in U.S. inventories and a potential ceasefire between Israel and Hamas.
Prices were sitting on strong gains from the prior session after media reports suggested that the Organization of Petroleum Exporting Countries and allies (OPEC+) could maintain its current pace of supply cuts until the end of 2024, keeping global supplies limited.
But crude prices still remained well within a $75 to $85 trading range established so far in 2024, as optimism over the OPEC+ was countered by industry data showing a massive build in U.S. oil inventories.
expiring in April fell 0.4% to $83.31 a barrel, while fell 0.3% to $78.58 a barrel by 21:02 ET (02:02 GMT).
Crude was also pressured by strength in the , as markets positioned for key data this week to gauge the path of U.S. inflation and interest rates.
API data shows large build in inventories
Data from the (API) showed U.S. crude oil inventories grew by 8.4 million barrels in the week to February 22, much more than analyst expectations for a build of 1.8 million barrels.
The reading indicates that U.S. markets remain well-supplied amid record-high production and relatively sluggish fuel consumption.
Still, U.S. markets are expected to tighten in the coming weeks, as a swathe of refineries resume operation after an extended winter break.
While the API data usually heralds a similar reading from , which is due later in the day, it has somewhat diverged from government data in recent weeks.
Biden says Israel agrees to Ramadan ceasefire
Media reports showed that U.S. President Joe Biden said Israel agreed to an over month-long halt in fighting in Gaza, for the Muslim holy month of Ramadan.
Israeli and Hamas officials downplayed Biden’s comments. But concurrently, Hamas officials were also seen studying a new ceasefire proposal put forward by the U.S., Qatar, and Egypt in Paris.
The Israel-Hamas war has provided a floor to oil prices in recent months, especially amid fears that an extended conflict in the Middle East will disrupt global oil supplies.
Continued attacks by the Yemeni Houthis on vessels in the Red Sea have also disrupted global shipping routes and delayed some oil deliveries in Europe and Asia.
ANZ analysts see tighter physical oil markets
Analysts at ANZ wrote in a morning note that strong U.S. refinery demand, high demand for U.S. oil exports and a widening spread between spot oil and one-month futures pointed to tighter physical markets in the coming months- a trend that is positive for oil prices.
They noted that Chinese spot buyers had also increased amid higher demand during the Lunar New Year Holiday, while any potential extension of supply cuts by the OPEC+ heralded even tighter markets later this year.
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