Investing.com– Oil prices steadied near five-month highs in Asian trade on Thursday as an Israeli strike in Gaza undermined recent reports of ceasefire talks with Hamas, while data showed U.S. crude inventories grew substantially more than expected.
Concerns over worsening geopolitical tensions saw crude prices rise even as broader financial markets were rattled by hotter-than-expected U.S. . Still, a spike in the – to near five-month highs- limited any major gains in crude.
expiring in June rose 0.1% to $90.55 a barrel, while rose 0.1% to $85.50 a barrel by 20:37 ET (00:37 GMT).
M.East tensions support oil prices after Israeli strike
An Israeli airstrike in the Gaza Strip, which reportedly killed three sons of a Hamas leader on Wednesday, fed into growing concerns that ceasefire talks between Israel and Hamas will once again fall through.
News of the talks, which began earlier this week in Egypt, had sparked some losses in oil prices with the prospect of a ceasefire agreement. But later reports showed continued disagreements between the two parties, diminishing the prospect of a deal.
Iran also maintained its threat of potential military action against Israel, keeping oil markets wary of a new conflict in the Middle East.
Worsening geopolitical conditions in the region were a major boost to oil prices in recent weeks, pushing them to five-month highs on the prospect of more disruptions in crude supplies from the region.
Middle East tensions also saw oil markets largely look past data showing a bigger-than-expected build in U.S. inventories.
US oil inventories grow more than expected
Official data on Wednesday showed U.S. grew 5.8 million barrels in the week to April 5, much more than expectations for a build of 0.9 million.
The build marked a third consecutive week of outsized growth in U.S. inventories, while an unexpected build in also pointed to some cooling in fuel demand.
The inventory builds furthered the notion that global oil supplies may not be as tight as markets were initially expecting, given that U.S. production remained at record highs of over 13 million barrels per day. Production is also forecast to increase further in 2024.
Demand in the world’s biggest fuel consumer may also cool in the coming months, especially amid pressure from sticky inflation and higher-for-longer U.S. interest rates.
