May 2 (UPI) — Oil prices moved lower early Wednesday as investors held their breath over possible supply-side strains, while the IMF warned of pressures in the Middle East.
Crude oil markets lacked definitive direction early Wednesday. That trend followed a report from the American Petroleum Institute showing U.S. inventories of crude oil grew by 3.4 million barrels and spare capacity in gasoline built up by 1.6 million barrels last year. Both are loose indicators for demand, and above expectations broadcast earlier in the week by commodity pricing group S&P Global Platts.
For the economy, the International Monetary Fund said growth for the oil exporters in the Middle East and North Africa is on pace to accelerate through 2019 on the back of improvements in the non-oil sectors. Growing trade tensions between the world’s leading economies, increased geopolitical tensions and a “highly uncertain” outlook for the price of oil leaves the MENA region exposed to risk, however.
“If these risks materialize, they could trigger potentially significant fiscal and financing pressures for many countries in the region, affecting prospects for continued fiscal consolidation and economic recovery,” the IMF warned.
Crude oil prices edged lower before the start of trading in New York. The price for Brent crude oil, the global benchmark, was down 0.64 percent as of 9:15 a.m. EDT to $72.66 per barrel. West Texas Intermediate, the U.S. benchmark, was down 0.16 percent to $67.14 per barrel.
Markets will get a better indication of the balance between supply and demand when the U.S. federal government releases its inventory data about an hour after the market opens.
Elsewhere, European data show seasonally adjusted gross domestic product for the 19 countries that use the euro currency increased by 0.4 percent in the first quarter. That’s down from euro-area growth of 0.7 percent in the fourth quarter. Some of the trade risk referenced Wednesday by the IMF was highlighted last week by European Central Bank President Mario Draghi.
Crude oil prices jumped Monday after Israeli Prime Minister Binyamin Netanyahu suggested Iran was still running a secret nuclear weapons program. That presentation came about two weeks before U.S. President Donald Trump decides whether to pull out of the U.N.-backed nuclear agreement.
“Because there was no real new information the market then focused mainly on the soaring U.S. dollar and concerns that red hot global demand may ease as data in Europe was less then overwhelming,” Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter.