Written by Katya Golubkova and Trixie Yap
(Reuters) – Oil prices edged lower on Wednesday after industry data showed a surprise drop in U.S. crude inventories last week was a positive sign for demand, although markets also kept an eye on hostilities in the Middle East. Rose.
At 0410 GMT, Brent crude oil futures were up 5 cents, or 0.06%, at $88.47 a barrel, while U.S. West Texas Intermediate crude futures were up 8 cents, or 0.1%, at $88.47 a barrel. = 83.44 dollars.
U.S. crude oil inventories fell by 3.237 million barrels in the week ending April 19, market sources said, citing data from the American Petroleum Institute. By contrast, six analysts polled by Reuters had predicted an increase of 800,000 barrels.
Traders are keeping an eye on official oil and product inventory data to be released at 10:30 a.m. EDT (14:30 GMT) for confirmation of a significant drawdown.
U.S. business activity cooled to a four-month low in April, and S&P Global said Tuesday that its preliminary Composite PMI Production Index, which tracks the manufacturing and services sectors, was at 50.9 this month, down from 52.1 in March. .
“This could help convince policymakers that rate cuts are necessary to support the economy,” ANZ analysts said in a note.
Lower U.S. interest rates could boost economic growth and, in turn, oil demand from the world's largest fuel consumer.
The impact on oil supplies has so far been limited, but analysts are still closely monitoring the latest developments in the Middle East conflict.
“Recent reports indicate that both Iran and Israel believe that the current operation has reached a mutual end and that no additional measures are necessary at this time,” ING analysts said in a note.
“The United States and Europe are preparing new sanctions against Iran, which may not have a significant impact on oil supplies in the short term,” he added.
Israeli military offensives intensified across Gaza on Tuesday, with the heaviest shelling in recent weeks.
(Reporting by Katya Golubkova in Tokyo and Trixie Yap in Singapore; Editing by Sonali Paul and Jamie Freed)