WTI edges lower to near $74.00 despite supply concerns due to Middle East tensions

• WTI price loses ground despite the rising supply fears over geopolitical tensions.
• Two US intelligence officials said that Iran and its allies are preparing potential retaliation against Israel.
• EIA Crude Oil Stocks Change fell by 3.728 million barrels, marking the sixth consecutive weekly decline.

West Texas Intermediate (WTI) Oil retraces its recent gains from the previous session, trading around $74.00 during the early European hours on Thursday. However, crude Oil prices may regain support from rising concerns about supply constraints due to ongoing geopolitical tensions in the Middle East.

CNN reported two US intelligence officials, saying that Iran and its allies are preparing for potential retaliation against Israel in response to the recent killings of a top military commander of Iran’s Hezbollah in Lebanon and a senior Hamas leader in Tehran.

On Wednesday, Oil prices appreciated due to a larger-than-expected drop in US crude Oil inventories. Energy Information Administration (EIA) Crude Oil Stocks Change declined by 3.728 million barrels for the week ending August 2, marking the sixth consecutive weekly decline. The stockpiles significantly exceeded the anticipated decrease of 0.4 million barrels and the previous decline was 3.436 billion barrels.

On Tuesday, Reuters reported that the EIA estimates global oil inventories decreased by approximately 400,000 barrels per day (bpd) in the first half of 2024. The EIA projects stockpiles will decline by around 800,000 bpd in the second half of the year.

The US Federal Reserve (Fed) is expected to implement a more aggressive rate cut starting in September, following weaker July employment data that has raised concerns about a potential US recession. Lower interest rates could stimulate growth in the US economy, the world’s largest Oil consumer, potentially increasing Oil demand.