Oil eases as US demand concerns outweigh fears over Middle East conflicts
Oil prices eased in early trade on Thursday as concerns about a potential slowdown in the U.S. economy amid prospects for delayed interest rate cuts outweighed worries over the risk of expanding conflict in the Middle East.
Brent crude futures dipped 9 cents, or 0.1%, to $86.95 a barrel at 0024 GMT, and U.S. West Texas Intermediate crude futures slipped 7 cents, or 0.1%, to $82.74 a barrel. Both benchmarks lost less than 1% on Wednesday.
«Tensions between Iran and Israel have eased, but Israeli attacks on Gaza are expected to worsen, and the risk of conflicts spreading to neighbouring countries is underpinning oil prices,» said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.
«On the other hand, a delayed U.S. interest rate cut has been a source of concern for the U.S. economy and the demand for crude oil, which weighs on oil market,» he said.
Israeli warplanes pounded the northern Gaza strip for a second day on Wednesday in a fierce assault that has shattered weeks of comparative calm. Israel also said it was moving forward with plans for an all-out assault on Rafah in the south.
Meanwhile, U.S. business activity cooled in April to a four-month low, with S&P Global saying on Tuesday its flash Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 50.9 this month from 52.1 in March.
The U.S. Federal Reserve has been spooked by a string of stronger-than-expected inflation and employment readings, which suggest the fight to bring inflation back down to the central
