Oil prices declines amid increasing US inventories, trade disruptions

(MENAFN) On Thursday, the trajectory of oil prices took a downturn, halting a promising three-day ascent, primarily driven by emerging concerns over dwindling demand. The market sentiment was notably influenced by a sudden uptick in US crude inventories, casting a shadow over the global oil landscape. As the clock ticked past 03:03 GMT, Brent crude futures experienced a dip, shedding 22 cents, or 0.3 percent, to settle at USD79.48 per barrel. Similarly, US West Texas Intermediate crude mirrored this decline, recording a 0.3 percent reduction, or 22 cents, to reach USD74 per barrel.

This reversal in oil prices comes on the heels of a three-day winning streak, during which both benchmark crude indices witnessed gains. A significant factor underlying this recent volatility is the mounting apprehension surrounding potential disruptions in global trade routes. Notably, the decision by prominent shipping entities to circumnavigate the Red Sea, opting instead for extended maritime routes, has escalated transportation and insurance expenditures, prompting investor caution.

Offering insights into the evolving dynamics of the oil market, Tsuyoshi Ueno, the chief economist at NLI Research Institute, elucidated that the prevailing focus has gravitated towards the deceleration in global demand. Ueno highlighted that while concerns persist regarding disruptions in the Red Sea, their immediate impact appears to be predominantly confined to oil supply dynamics, provided they don't escalate to encompass critical chokepoints like the Strait of Hormuz. Further exacerbating market apprehensions, Ueno pointed to the burgeoning crude inventories and the unprecedented surge in domestic oil production within the United States as pivotal factors exerting downward pressure on oil prices.

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