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Brent crude futures fell 24 cents, or 0.27%, to $88.18 a barrel
by 1024 GMT. U.S. West Texas Intermediate crude futures lost 33
cents, or 0.4%, to $83.03 a barrel.
That reversed some of Brent's roughly 1.6% gain from the
previous session, when the market was also buoyed by a weaker
U.S. dollar and as investors dialled down concerns over conflict
in the Middle East.
Perceived de-escalation between Iran and Israel could remove
another $5-10 a barrel of "the still elevated geopolitical risk
premium" in coming months, Goldman Sachs analysts said in a
note, putting a $90 a barrel ceiling on Brent.
U.S. business activity cooled in April to a four-month low, with
S&P Global saying on Tuesday that 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 world’s biggest economy currently falls into the "bad news
is good news category", said Tamas Varga at oil broker PVM. "The
odds of a Fed rate cut have grown once again."
U.S. interest rate cuts could bolster economic growth and, in
turn, demand for oil.
"Attention shifted to macro issues, to the stock markets and to
the dollar and none of them disappointed," Varga added.
U.S. crude inventories fell by 3.237 million barrels in the week
ended April 19, according to market sources citing American
Petroleum Institute figures. In contrast, six analysts polled by
Reuters had expected a rise of 800,000 barrels.
Traders will be watching the official data release on oil and
product stockpiles at 1430 GMT.
Meanwhile, the Israel-Hamas conflict continues to rage with some
of the heaviest shelling in weeks on Tuesday, while sources on
Wednesday said Israel is preparing to evacuate Rafah ahead of a
promised assault on the city.
(Reporting by Robert Harvey in London, Katya Golubkova in Tokyo
and Trixie Yap in Singapore; Editing by Kirsten Donovan)
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