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May 1, 2024

Oil Prices Decline for Third Consecutive Day Amid Growing US Production and Ceasefire Hopes

Oil prices continued their downward trend for a third consecutive day on Wednesday, driven by an increase in crude inventories and production in the United States, the world’s largest oil consumer. Additionally, hopes for a ceasefire agreement in the Middle East added pressure on prices.

Brent crude futures for July slipped by 47 cents, or 0.5 percent, settling at $85.86 a barrel by 0005 GMT. Similarly, US West Texas Intermediate crude for June declined by 53 cents, or 0.6 percent, reaching $81.40 per barrel.

US crude oil inventories surged by 4.906 million barrels last week, while gasoline and distillate stockpiles witnessed declines, according to reports citing figures from the American Petroleum Institute. Gasoline inventories dropped by 1.483 million barrels, and distillates fell by 2.187 million barrels. Official data from the Energy Information Administration (EIA) is awaited at 10:30 a.m. EDT (1430 GMT).

Furthermore, US crude supply exhibited signs of growth, with production climbing to 13.15 million barrels per day (bpd) in February from 12.58 million bpd in January, marking the largest monthly increase in about 3-1/2 years, as reported by the Energy Information Administration on Tuesday.

The possibility of a ceasefire agreement between Israel and Hamas, spearheaded by Egypt, contributed to the decline in oil prices. Renewed efforts to revive stalled negotiations between the two parties raised hopes for an end to the conflict, which could alleviate concerns about disruptions in supply from the Middle East.

Despite the downward pressure on prices, output by the Organization of the Petroleum Exporting Countries (OPEC) was anticipated to decrease by 100,000 bpd in April to 26.49 million bpd, according to a Reuters survey on Tuesday. This decline reflects lower exports from Iran, Iraq, and Nigeria amidst ongoing voluntary supply cuts by some members in agreement with the wider OPEC+ alliance.

Jhumpa Lahiri

Jhumpa Lahiri

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