HG MARKETS:

Oil prices experienced a third consecutive decline on Wednesday due to anticipated increases in U.S. commercial inventories, coupled with weakened economic indicators from China and reduced expectations of interest rate adjustments, which raised concerns about global demand. Brent futures for June dipped by 0.2% to $89.81 per barrel, while U.S. crude futures for May decreased by 0.2% to $85.17 per barrel. Despite geopolitical tensions, oil prices have softened this week as economic challenges offset potential gains, with attention focused on Israel’s response to Iran’s recent attack.

 Analysts anticipate that Iran’s unprecedented strike on Israel will not result in significant sanctions on its oil exports from the United States.John Evans, a broker at oil firm PVM, noted that oil prices are adjusting downwards due to the reduction of the “war premium” and dampened expectations for interest rate cuts. Federal Reserve officials, including Chair Jerome Powell, refrained from indicating a timeline for potential rate cuts, disappointing investors who had hoped for substantial reductions in borrowing costs this year.

While Britain’s inflation rate slowed less than anticipated in March, suggesting a delay in the first rate cut by the Bank of England, inflation across the Eurozone decreased last month, reinforcing expectations for a rate cut by the European Central Bank in June. Concerns also arose from an increase in U.S. crude inventories, mixed economic data from China, and technical indicators signaling overbought conditions, prompting some profit-taking.

In China, despite faster-than-expected economic growth in the first quarter, other indicators pointed to fragile domestic demand. A Reuter’s poll indicated a rise of approximately 1.4 million barrels in U.S. crude inventories last week, with official data from the Energy Information Administration awaited. Additionally, Tengizchevroil announced plans for maintenance at one of its production trains in the Tengiz oilfield in Kazakhstan in May.