Oil prices dip as US stockpiles increase, M.East tensions persist

Investing.com-- Oil prices fell in Asian trade on Wednesday as industry data pointed to a sustained increase in U.S. inventories, although losses were limited by continued concerns over geopolitical unrest in the Middle East.

Industry data released on late-Tuesday showed that U.S. inventories unexpectedly grew in the week to May 3, further undermining bets on tighter global supplies. 

Elsewhere, Israel kept up its strikes on Rafah in Southern Gaza, while ceasefire negotiations with Hamas yielded little progress. 

Brent oil futures expiring in July fell 0.4% to $82.82 a barrel, while West Texas Intermediate crude futures fell 0.4% to $77.76 a barrel by 21:35 ET (01:35 GMT).

Strength in the dollar also pressured oil prices, as Federal Reserve officials downplayed expectations of lower interest rates this year.

US oil inventories clock unexpected build- API

Data from the American Petroleum Institute showed on Tuesday that U.S. oil inventories grew 0.5 million barrels in the week to May 3, ducking analysts expectations for a draw of 1.4 million barrels.

The data comes after U.S. inventories saw an unexpected, outsized build in the prior week, which spurred speculation that global oil markets were not as tight as initially expected.

The API data usually heralds a similar reading from official inventory data, which is due later on Wednesday.

Strong U.S. supplies have undermined expectations of tighter global oil markets, especially as recent data also showed U.S. oil production raced back to record highs in February. 

Middle East tensions persist, Israel-Hamas ceasefire uncertain 

Israel kept up its offensive against Rafah on Tuesday, while also seizing a key main border crossing in the city. 

The move came even as Hamas officials reportedly accepted a new ceasefire proposal for Gaza- one that Israel rejected. Hamas also expressed ire over Israel’s attacks on Rafah, and that the strikes largely undermined any progress towards a truce.

Still, U.S. officials said a ceasefire could still be reached, as delegates from both sides met in Cairo for negotiations.

The prospect of continued geopolitical unrest in the Middle East presented some support to oil prices, amid bets that the unrest will disrupt supplies in the oil-rich region.