Oil prices fall nearly 1% on US demand concerns
Crude oil inventory in the US rose by 3.8 million barrels to 419 million barrels in the week ending 27 June, according data from the US Energy Information Administration, raising concerns of a weakening demand in the world's largest economy and the largest consumer of oil.
Also, gasoline demand during the week under review fell to 8.6 million barrels per day from 9.7 million barrels a week ago raising demand fears amid the ongoing summer driving season in the US.
Around 8:20 am, the August contract of Brent on the Intercontinental Exchange was trading at $68.47 per barrel, lower by 0.93% from its previous close. The August contract on the West Texas Intermediate (WTI) on the NYMEX was trading 0.89% lower at $66.85 a barrel.
The prices eased after a 3% surge on Wednesday after Iran suspended its cooperation with the International Atomic Energy Agency (IAEA), raising concerns, raising concerns of another escalation in the West Asian conflict.
Further, President Donald Trump's announcement of the US reaching a trade deal with Vietnam also supported the crude prices on Wednesday as it raised hopes of other trade deals coming through ahead of the 9 July deadline set by Trump.
Crude prices have been below $70 per barrel after the ceasefire announcement between Iran and Israel on 24 June. Recently, union minister for petroleum and natural gas Hardeep Singh Puri said that crude prices may stabilise in the range of $60-65 a barrel after declining from their recent highs, according to Union minister for petroleum and natural gas Hardeep Singh.
"This range is fine," Puri said on the sidelines of an event.
India imports about 85% of its total oil consumption, and an increase in prices would inflate the import bill, hurting economic growth.
During the conflict, India closely monitored the situation and looked at alternative sources for importing oil in case the Strait of Hormuz was blocked. India has diversified its oil import sources to nearly 40 countries after the global markets witnessed significant volatility in 2022 amid the Russia-Ukraine conflict.
The Indian crude oil basket, which is a weighted average of different crude oil grades processed in Indian refineries, stood at $68.27 per barrel on 1 July. The average basket price in June was $69.77 a barrel, against $64.04 per barrel in May.
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