Oil settles down as demand worries outweigh Mideast supply risks
WASHINGTON: Oil prices settled down 3% on Wednesday, pressured by a rise in US commercial inventories, weaker economic data from China and US progress on Ukraine and Israel aid bills.

Brent futures for June settled down US$2.73, or 3%, at US$87.29 a barrel, while US crude futures for May settled down US$2.67 or 3.1% at US$82.69 a barrel, their biggest fall since March 20.

Oil prices have softened this week as economic headwinds curb gains from geopolitical tensions, with markets eying how Israel might respond to Iran's weekend attack.

Analysts do not expect Iran's unprecedented missile and drone strike on Israel to prompt dramatic US sanctions on Iran's oil exports.

US crude inventories rose by 2.7 million barrels to 460 million barrels last week, government data showed, nearly double analysts' expectations in a Reuters poll for a 1.4 million-barrel build.

Oil prices continued to decline after US House of Representatives Speaker Mike Johnson said the text of four bills providing assistance to Ukraine, Israel and the Indo-Pacific would be filed "soon today," with a fourth with "other measures to confront Russia, China and Iran" posted later in the day.

"The market was waiting to sell off on indications of calming of tensions in the Middle East ... progress on these bills and a three-day delay in Israel's response to Iran is helping today," said John Kilduff, partner at Again Capital LLC in New York.

Top Federal Reserve officials including Chair Jerome Powell backed away on Tuesday from providing any guidance on when interest rates may be cut, dashing investors' hopes for meaningful reductions in borrowing costs this year.

Britain's inflation rate slowed by less than expected in March, signaling that a first rate cut by the Bank of England could also be further off than previously thought.

However, inflation slowed across the euro zone last month, reinforcing expectations for a European Central Bank rate cut in June.

"A strengthening trend in the US dollar and the ability of crude stocks to increase in the face of reduced Mexican imports and increasing SPR refills are also sending off some bearish vibes," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

In China, the world's biggest oil importer, the economy grew faster than expected in the first quarter, but several other indicators showed that demand at home remains frail.

Elsewhere, Tengizchevroil announced plans for scheduled maintenance at one of six production trains at the Tengiz oilfield in Kazakhstan in May. — Reuters
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Oil prices settled down 3% on Wednesday, pressured by a rise in US commercial inventories, weaker economic data from China and US progress on Ukraine and Israel aid bills.