Crude oil prices fall as demand concerns outweigh Middle East supply fears

Mumbai, 17 Apr (Commoditiescontrol): Crude oil prices slipped in early trade on Wednesday as concerns over global demand due to weak economic momentum in China and fading hopes for U.S. interest rate cuts in the near term outweighed supply fears on heightened tensions in the Middle East.

Brent futures for June delivery slipped 7 cents, or 0.1%, to $89.16 a barrel, while U.S. crude futures for May delivery fell 10 cents, or 0.1%, to $85.26 a barrel.

Oil prices have softened so far this week as economic headwinds pressured investor sentiment, curbing gains from geopolitical tensions, with eyes on how Israel might respond to Iran's attack on Israeli territory over the weekend.

The run of disappointing data showing stronger-than-expected inflation means the Federal Reserve will likely need more time than previously thought to be confident that inflation is on the path to 2%, Fed Chair Jerome Powell said.

In China, the world's biggest oil importer, the economy grew faster than expected in the first quarter, but several March indicators, including property investment, retail sales and industrial output, showed that demand at home remains frail, weighing on overall momentum.

In the Middle East, a third meeting of Israel's war cabinet set for Tuesday to decide on a response to Iran's first-ever direct attack was put off until Wednesday, as Western allies eyed swift new sanctions against Tehran to help dissuade Israel from a major escalation.

Analysts said, however, Iran's unprecedented missile and drone strike on Israel is unlikely to prompt dramatic sanctions action on Iran's oil exports from the Biden administration due to worries about boosting oil prices and angering top buyer China.

Meanwhile, U.S. crude oil inventories rose last week more than expected by analysts polled by Reuters, however gasoline and distillates stockpiles fell, according to market sources citing American Petroleum Institute figures on Tuesday.

Official data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due on Wednesday at 10:30 a.m. (1430 GMT).

(By Commoditiescontrol Bureau: 09820130172)