Crude oil prices dipped today, after the latest oil inventory report from the API showed a build, alleviating concern about the state of global supply.
In the prior session, crude oil had managed to recoup some of the losses it suffered on Monday amid the stock market meltdown.
The American Petroleum Institute reported an oil inventory build of a modest 180,000 barrels for the week to August 2. Although minor, the build appeared to have surprised traders, as it snapped a five-week streak of inventory declines.
In fuels, however, the reported builds were more significant, casting doubt over demand developments during peak consumption season.
Official inventory data is coming out later today from the Energy Information Administration. However, Reuters recently detailed the significant gaps between estimate data and factual data on U.S. oil demand, with factual data revealing much stronger demand than estimate data suggested.
Meanwhile, concern about demand continues to weigh on prices, while the geopolitical premium from growing tensions in the Middle East remains muted for the time being.
"Sentiment in financial markets has steadied and crude has stopped sliding, but it feels like a tentative bottom," VandanaHari, founder of Vanda Insights, told Bloomberg. "Oil market participants are keeping a close eye on rising tensions in the Mideast but not pricing in any supply risk premium."
The event that everyone is bracing up for is Iran's attack on Israel, which Tehran vowed to exact as revenge for the Israeli attack that killed Hamas leader Ismail Haniyeh in the Iranian capital.
"Any escalation of the conflict in the Middle East could see a greater risk of disruptions to supplies from the region," ANZ analyst Daniel Hynes said, as quoted by Reuters.
Meanwhile, Libya suspended production at its largest field, Sharara, which has a capacity to produce 300,000 barrels of crude daily, adding to supply concerns as the EIA reported that global oil stocks had shed an estimated 400,000 barrels daily.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More