NEW YORK – Oil was little changed after erasing most of the surge following Hamas’ attacks on Israel over the weekend.

Prices slid for a third day, with the West Texas Intermediate (WTI) sliding towards US$83 after dropping on Wednesday following a New York Times report that US intelligence shows Iran was surprised by Hamas’ attack on Israel.

That may reduce the chances of additional sanctions on Iranian oil, and help prevent the nation and its proxies across the Middle East from being drawn into the conflict.

The industry-funded American Petroleum Institute reported a large increase in stockpiles, according to people familiar with the data. However, inventory at Cushing, Oklahoma – the delivery point for WTI – was seen resuming drops towards critically low levels after a small increase last week.

Official data is due later on Thursday, as well as monthly oil market reports from Opec and the International Energy Agency.

Oil’s gains this week have been curbed by Opec+ leader Saudi Arabia on Tuesday reiterating support for the group’s efforts to balance oil markets.

Opec+ is the partnership between the Organisation of the Petroleum Exporting Countries and its allies, including Russia.

Record-high US production and the possibility of a deal between the United States and Venezuela have also helped ease concerns about supply tightness.

Prices are still marginally higher in 2023 following a surge last quarter after Saudi Arabia and Russia curtailed production.

Brent and WTI had earlier surged by more than US$3.50 per barrel on Monday over concern the clashes between Israel and Palestinian Islamist group Hamas could escalate into a broader conflict that would disrupt global oil supply.

Prices settled slightly lower on Tuesday after Saudi Arabia said it was working with regional and international partners to prevent an escalation, and reaffirmed its efforts to stabilise oil markets.

“Both WTI and Brent retreated... as concerns of a sudden and unexpected supply disruption have been swept aside for now,” PVM analyst Tamas Varga said.

Trading house Mercuria sees oil prices reaching US$100 a barrel if the situation in the Middle East escalates further, deputy chief executive Magid Shenouda said on Wednesday.

Mr Edward Moya, senior market analyst at Oanda, said: “The only thing that is becoming clear for energy traders is that the road for the global growth recovery is getting rockier.”

He noted that the “US consumer is weakening, (and) Germany might be headed for a deeper recession”.

In Europe, the German government confirmed that it expects the economy to contract by 0.4 per cent in 2023 because of persistently high inflation.

Russia and Saudi Arabia met in Moscow on Wednesday, when Russian President Vladimir Putin said that Opec+ coordination will continue “for the predictability of the oil market”.

Mr Putin also urged companies to prioritise the Russian domestic market. The country’s ban on petrol and some diesel exports was rolled back again last week, as diesel exports that arrive at ports by pipeline were permitted.

In the US, producer prices increased more than expected in September amid higher costs for energy products and food, but underlying inflation pressures at the factory gate continued to abate.

Interest rate hikes to tame inflation can slow economic growth and reduce oil demand.

US Treasury Secretary Janet Yellen still expected the US economy to experience a soft landing, despite “additional concerns” brought about by the situation in Israel.

Uncertainty around the path of the US economy pushed Federal Reserve officials into a cautious stance at their meeting in September, according to minutes of the Sept 19 to 20 session.

In a report, the US Energy Information Administration projected global oil inventories would fall by 200,000 barrels per day in the second half of 2023 from voluntary output cuts from Saudi Arabia, along with reduced production targets among Opec+ countries.

Exxon Mobil agreed to buy US rival Pioneer Natural Resources in an all-stock deal valued at US$59.5 billion that would make it the biggest producer in the Permian shell, the largest US oilfield.

Analysts in a Reuters poll forecast that US crude inventories rose by 500,000 barrels in the week ended Oct 6.

On US supply, industry data showed crude stocks rose by about 12.9 million barrels in the week ended Oct 6, according to market sources citing American Petroleum Institute figures on Wednesday. BLOOMBERG, REUTERS