WTI remains on the defensive around $78.00 amid signs of easing supply tightness, stronger US Dollar

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $78.00 on Wednesday. The black gold edges lower due to a stronger US Dollar (USD) and signs of easing supply concerns. Oil traders will shift their focus to the EIA Crude Oil stockpiles report due later on Wednesday.

Ceasefire talks between Israel and Hamas are still uncertain. Israel's war cabinet voted to continue the military attack on Hamas, and Israeli troops launched strikes on Gaza's southernmost city. Even though Hamas agreed to a ceasefire proposal on Monday, Israel said the conditions did not meet its demands, as per the New York Times. Any signs of escalating geopolitical risks in the Middle East could lead to a sharp increase in oil prices, according to the EIA. On the one hand, the easing fear of an oil supply disruption might drag WTI prices lower. 

On Tuesday, the American Petroleum Institute (API) revealed that US crude inventories for the week ending May 3 rose by 509,000 barrels from a build of 4.9M barrels in the previous week. The market consensus estimated that stocks would decrease by 1.43M barrels. A rise in US crude oil stock exerts some selling pressure on black gold prices, as it’s typically a sign of weak demand. 

On the other hand, Saudi Arabia raised the price of its crude sold to Asia, Northwest Europe, and the Mediterranean in June on the back of a strong demand outlook this summer. The increase is in line with Saudi Arabia’s efforts to keep prices up as the prospect of conflict in the Middle East fades, according to Bloomberg.