Oil prices decline after US inventory data

Oil prices fell in European trade on Thursday, resuming its losses after a short hiatus yesterday following a spike in US crude stocks.

Prices are also pressured by the dollar's steep rise against major rivals, making dollar-denominated commodities costlier to holders of other currencies. 

Markets are closely monitoring the mounting tensions between Iran and Israel which threatens to develop into a wide-scale war in the Middle East, threatening crude supplies. 

 Prices

US crude fell 0.9% to $85.53 a barrel, with a session-high at $86.60.

Brent declined 0.75% today to $89.85 a barrel, with a session-high at $90.89. 

US crude rose 1.1% while Brent added 1.2%, the first profit in four days. 

US Stocks 

The Energy Information Administration reported a sharp increase of 5.8 million barrels in US crude stocks in the week ending April 5, the third such weekly increase in a row, beating estimates of a 0.9 million buildup.

According to the EIA, total commercial stocks rose to 457.5 million barrels, the highest since July 2023, in a negative sign for demand in the US. 

US Production

US crude production stayed flat last week at 13.1 million barrels, the lowest since the week ending December 8. 

The Dollar 

The dollar index rose 0.2% on Thursday, extending gains for a second session and scaling a five-month high at 105.37 against a basket of major rivals. 

The data hurt market estimations about multiple Federal Reserve interest rate cuts this year. 

Iran-Israel Tensions 

The Israeli government warned that if Iran attacked Israel, the Israeli army would respond with an attack on Iranian territory. 

Iran’s supreme leader Khamenei threatened to punish Israel, after accusing it of striking the Iranian consulate in Syria last week, killing 7 military officials. 

The mounting Israel-Iran tensions threaten a potential widening of the war between the two sides in the region, which could threaten supplies. 

Oil Prices Outlook 

Goldman Sachs’ analysts expect Brent to remain below $100 a barrel, provided no new surprising geopolitical hits take place.