Crude oil price declines as traders look to US stockpiles and Middle East

Oil fell as a US industry group signalled a modest rise in nationwide crude inventories, and the Biden administration renewed efforts to secure a cease-fire in the Middle East, potentially easing tensions.

Brent fell below $76 a barrel after gaining more than 4% over two days, while West Texas Intermediate declined toward $71. The American Petroleum Institute estimated that stockpiles rose by 1.6 million barrels last week, according to people familiar with the figures. Official data come later on Wednesday.

In the Middle East, Secretary of State Antony Blinken and Israeli Prime Minister Benjamin Netanyahu agreed the recent killing of Hamas leader Yahya Sinwar opened new possibilities for ending the Gaza conflict. Still, traders are waiting to see how Israel retaliates against Iran for a missile strike earlier this month.

Oil has had a roller-coaster ride in October, boosting volatility, with tensions in the Middle East raising the spectre of supply disruptions in a region that accounts for about a third of world output. In Asia, top importer China has rolled out a series of stimulus measures to combat a slowdown, potentially aiding energy demand, but there are doubts about the moves’ effectiveness.

“The crude oil market continues to reflect a geopolitical premium," said Gao Jian, an analyst at Qisheng Futures Co. Should that subside, “investors’ attention will then switch back to weak fundamentals, with risks skewed to the downside," Gao said.

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