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By Alex Lawler and Deep Kaushik Vakil
LONDON (Reuters) -Oil prices steadied on Tuesday as easing supply concerns and signs of weakening demand countered fears of escalation in the Middle East.
Brent crude futures fell 36 cents, or 0.4%, to $82.97 a barrel by 11:21 a.m. ET (1521 GMT) U.S. West Texas Intermediate crude futures were down 28 cents, or 0.4%, to $78.20 a barrel.
The first-month Brent contract’s premium to the six-month contract slipped to $2.81 a barrel, its lowest since mid-February, signaling easing worries about tight supplies.
Current inventory data shows crude oil and petroleum supplies are running 1.1 million barrel per day above forecasts in countries that are part of the Organisation For Economic Co-operation and Development, according to an analysis by energy brokerage StoneX.
“Global inventories remain in a building phase and has accelerated recently,” StoneX analyst Alex Hodes wrote to clients on Tuesday.
Oil traders largely looked past escalating tensions in the Middle East, where the Israeli military seized control of the Rafah border crossing between the Gaza Strip and Egypt and its tanks pushed into the southern Gazan town of Rafah, as mediators struggled to secure a ceasefire agreement.
“Crude traders seem to have developed a higher tolerance for geopolitical risk in the Middle East and its potential to disrupt global oil supply,” said Ricardo Evangelista, senior analyst at financial brokerage ActivTrades.
“Instead, their focus appears directed towards the uncertainties surrounding global economic growth prospects and the anticipated impact of sluggish growth on oil demand,” Evangelista added.
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Last week, Brent and WTI had their steepest weekly losses in three months as weak U.S. jobs data fueled hopes for interest rate cuts.
A stronger dollar also weighed on oil prices, making crude more expensive for traders holding other currencies. [USD/]
Oil prices found some support after the U.S. Department of Energy announced solicitations for up to 3.3 million barrels of oil for replenishment of the country’s Strategic Petroleum Reserve.
The U.S. Energy Information Administration will post its monthly short-term energy outlook on Tuesday. Its weekly update on stockpiles is due on Wednesday.
The American Petroleum Institute’s weekly U.S. oil and fuel inventories data will be posted on Tuesday after 4:30 p.m. ET.
U.S. crude oil and product stockpiles were expected to have fallen last week, a Reuters poll showed. Crude inventories could have fallen by about 1.2 million barrels in the week to May 3, based on analyst forecasts. [EIA/S]
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