Brent declines after API reports a rise in crude stocks

The front-month ICE Brent contract has declined by $1.30/bbl on the day, to trade at $63.30/bbl at 09.00 GMT.

IMAGE: Oil barrels and a downward arrow depicting price drop. Getty Images
Upward pressure:

Supply concerns in the global oil market continue to support Brent futures.

On Tuesday, the US government sanctioned three vessels and three shipping companies for allegedly supporting Yemen-based Houthi militants. The vessels allegedly delivered liquefied petroleum gas (LPG) and gas oil to the Houthi-controlled Ras Isa port.

The move reinforces Washington’s commitment to tightening sanctions on Iran and its proxies including the Houthis in Yemen, Hezbollah in Lebanon and Hamas in Gaza. Brent’s price found some support after the announcement, according to market analysts.

Downward pressure:

Brent’s price has moved lower after the American Petroleum Institute (API) reported a rise in US crude stocks.

US crude oil inventories gained by 3.8 million bbls in the week ending 25 April, according to API estimates.

Market analysts expected a much smaller rise of 390,000 bbls. A buildup in inventories typically signals weaker oil demand, which can put downward pressure on Brent's price.

The API report was “largely bearish”, according to two analysts from ING Bank.

Besides, concerns about oil demand growth amid the global trade war has weakened market sentiment, according to analysts. Oil prices remain under pressure amid ongoing tariff tensions and growing speculation that OPEC+ may ease production restrictions in the upcoming months.

“Lingering tariff risks and expectations of OPEC+ loosening output curbs continue to pressure oil prices,” the analysts added.

By Aparupa Mazumder

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