Hassan Magulumali
On Wednesday, oil prices experienced their third consecutive day of decline, driven by growing optimism surrounding a potential ceasefire agreement in the Middle East, alongside the uptick in crude inventories and production in the United States, the largest consumer of oil globally.
Both major oil price benchmarks witnessed a decrease of more than 1% At 0650 GMT. Brent crude futures for July dropped by 88 cents to $85.45 per barrel, while U.S. West Texas Intermediate crude futures for June fell by 90 cents to $81.03 per barrel.
Expectations that a ceasefire agreement between Israel and Hamas could be in sight, following a renewed push led by Egypt to revive stalled negotiations between the two, pushed oil prices lower.
“The potential for a ceasefire agreement between Israel and Hamas has eased concerns of an escalation of the conflict and any possible disruptions to supply,” ANZ analysts said in a note on Wednesday.
Additionally, swelling US crude oil inventories and an increase in crude supply contributed to the downward pressure on prices.
According to the Energy Information Administration, US production surged to 13.15 million barrels per day in February from 12.58 million bpd in January, marking its most significant monthly rise in approximately 3-1/2 years.
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Analysts at ANZ highlighted that persistent signs of inflation raised concerns regarding the demand for crude oil, especially with the approaching US driving season, when gasoline demand typically spikes.
“Continued signs of inflation also raised concerns about demand for crude oil.This comes ahead of the US driving season,where demand for gasoline rises strongly,” analysts at ANZ said
To prevent further declines, the Organization of the Petroleum Exporting Countries (OPEC) saw its output decrease by 100,000 bpd in April to 26.49 million bpd.
The USA chooses Egypt for its growing influence in the Middle East and Arab world due to historical importance and potential gas reserves in the Eastern Mediterranean, establishing Egypt as a significant player in the region.
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