By Arathy Somasekhar
HOUSTON (Reuters) – Oil prices closed slightly lower on Tuesday, adding to a decline of more than 6% in the previous session, on a report that Israeli Prime Minister Benjamin Netanyahu will hold a meeting for a diplomatic solution to the war in Lebanon .
futures fell 30 cents, or 0.4%, to $71.12 a barrel, while U.S. West Texas Intermediate crude fell 17 cents, or 0.3%, to $67.21 a barrel.
The two benchmarks were up more than $1 a barrel earlier in the session. Both contracts fell on Monday to their lowest levels since October 1, after Israel’s retaliatory strike on Iran over the weekend bypassed Tehran’s oil infrastructure.
Netanyahu will hold a meeting Tuesday evening with Israeli ministers and the heads of the country’s military and intelligence community on talks for a diplomatic solution to the war in Lebanon, Axios reporter Barak Ravid said on X, citing two sources.
Iranian Foreign Ministry spokesman Esmaeil Baghaei said Monday that Iran “will use all available tools” to respond to the weekend Israeli attack.
Meanwhile, declining oil demand from China, the world’s largest crude oil importer, continues to dampen global oil consumption and prices.
Demand will return to normal growth rates after Chinese President Xi Jinping introduces new stimulus measures for the economy, BP (NYSE:) CEO Murray Auchincloss told Reuters.
The oil market is currently in balance and demand is expected to average 104.5 million barrels per day this year, the CEO of the Saudi oil giant said. Saudi Aramco (TADAWUL:) said.
“Markets attempted a modest recovery but remain under pressure from subdued demand from China and concerns about increasing supply,” said Andrew Lipow, president of Lipow Oil Associates.
Oil inventories fell by 573,000 barrels in the week ended Oct. 25, market sources said, citing American Petroleum Institute figures on Tuesday.
Gasoline inventories fell by 282,000 barrels and distillate inventories fell by 1.46 million barrels, they said.
Figures from the US government are expected on Wednesday morning. [EIA/S]
U.S. crude oil and gasoline inventories were expected to rise last week, while distillate inventories were expected to fall, a preliminary Reuters poll showed on Monday.
Meanwhile, the US Federal Reserve will cut interest rates by 25 basis points on November 7, according to all 111 economists in a Reuters poll, with a majority of more than 90% predicting another move of a quarter of a percentage point in December.
Lower interest rates lower the cost of borrowing, which can boost economic activity and boost oil demand.
