By Scott DiSavino
NEW YORK (Reuters) -Oil prices fell about 3% to a seven-week low on Wednesday on a surprise rise in stock prices, the prospect of a ceasefire deal in the Middle East and fading hopes for short-term interest rate cuts in the US that could provide a boost. demand for oil.
() Futures for July delivery fell $2.89, or 3.4%, from where the July contract closed on Tuesday, settling at $83.44 a barrel on Wednesday.
That was about 5.0% lower than where the Brent June contract closed on Tuesday when it was still the front month, which would be the biggest daily front-month percentage decline since October 2023.
U.S. West Texas Intermediate (WTI) crude fell $2.93, or 3.6%, to settle at $79.00 per barrel.
Those were the lowest closing prices for both benchmarks since March 12 and both benchmarks were in technical oversold territory for the first time since December 2023.
In other energy markets, U.S. diesel futures closed at their lowest since July 2023, while U.S. gasoline prices were at a seven-week low.
The U.S. Energy Information Administration (EIA) said energy companies added a surprise 7.3 million barrels of crude oil to their inventories in the week ending April 26.
That compares with the pullback of 1.1 million barrels that analysts forecast in a Reuters poll and the increase of 4.9 million barrels shown in data from the American Petroleum Institute (API), an industry group. [EIA/S] [EIA/S]
“Crude production is strong. At this time of year we should be using less crude as more barrels pass through the refinery,” Bob Yawger, director of energy futures at Mizuho, told Reuters.
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EIA also reported a surprise increase in gasoline inventories of 0.3 million barrels. Analysts expected gasoline inventories to fall by 1.1 million barrels.
Expectations were growing in the Middle East that a ceasefire deal between Israel and Hamas could be in sight after renewed pressure from the US and Egypt. Still, Israeli Prime Minister Benjamin Netanyahu has vowed to press ahead with a long-promised attack on the city of Rafah in southern Gaza.
“The crude oil market is under pressure due to continued hopes for a ceasefire,” said Ole Hansen of Saxo Bank.
In other news, the US accused Russia of violating the international ban on chemical weapons by using the asphyxiant chloropicrin against Ukrainian troops and using riot control agents “as a method of war” in Ukraine.
US interest rates
The US Federal Reserve kept interest rates stable and indicated that it was still leaning towards a possible reduction in borrowing costs, but raised the alarm over the recent disappointing inflation figures.
The Fed’s latest policy statement noted that “inflation has eased,” but any delay in rate cuts could slow economic growth and dampen oil demand.
