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This week's supply report from the U.S. Energy Information
Administration (EIA) on Wednesday showed gasoline stockpiles
fell less than forecast while distillate stockpiles rose against
expectations of a decline, reflecting signs of slowing demand. [EIA/S]
"It does not exactly give a healthy state of domestic demand in
the U.S.," said John Evans of oil broker PVM, who added that
U.S. economic data out later in the day would be important for
sentiment. "Oil prices today will not be in the hands of the oil
market," he said.
Brent crude futures fell 4 cents, or 0.1%, to $87.98 a barrel by
1005 GMT while U.S. West Texas Intermediate crude futures were
down 7 cents, or 0.1%, at $82.74.
U.S. crude inventories unexpectedly fell sharply last week, the
EIA report also showed, as exports jumped.
The concern about U.S. fuel demand arises amid signs of cooling
U.S. business activity in April and as stronger-than-expected
inflation and employment data means the Federal Reserve is seen
as more likely to delay expected interest rate cuts.
U.S. economic data out later on Thursday includes first-quarter
economic growth. Gross domestic product (GDP) likely increased
at a 2.4% annualised rate, according to a Reuters survey of
economists.
"The current weakness in benchmark prices, after testing above
$90 levels, is due to market sentiment refocusing on global
economic headwinds over geopolitical tensions," said Emril Jamil,
senior oil analyst at LSEG Oil Research.
Fighting in the Gaza Strip between Israel and Hamas is expected
to expand as Israel may start an assault on Rafah, in the
enclave's south, which may increase the risk of a wider war that
could potentially disrupt oil supplies.
Still, oil supply has not been affected as yet and there have
been no other signs of direct conflict between Israel and
Hamas-backer Iran, a major oil producer, since last week.
(Additional reporting by Deep Vakil in Bengaluru, Yuka Obayashi
in Tokyo and Jeslyn Lerh in Singapore; editing by Jason Neely
and David Goodman)
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