Oil prices fell to near their lowest since mid-March as traders tracked tensions in the Middle East and a U.S. inventory report that is driving prices lower.
Brent crude fell below $83 a barrel, after closing above its 100-day moving average in the previous two sessions. Futures have traded in a range of just over $1 so far this week. West Texas Intermediate crude was above $78 a barrel.
Crude stockpiles at the Cushing, Okla., storage hub rose by more than 1 million barrels last week, the American Petroleum Institute estimated, according to people familiar with the figures. The data also showed a rise in gasoline and distillate stockpiles nationwide. Official data will be released later Wednesday.
In the Middle East, the Israeli army advanced on the Gaza city of Rafah, indicating that a truce agreement between the Jewish state and Hamas remains elusive.
Downtrend
Oil has been on a downward trend since early April, posting losses in three of the past four weeks. Market indicators, from forward spreads (between the two nearest futures contracts) to refining margins, are pointing to a weaker economic outlook for oil. Brent and WTI spreads have narrowed to multi-month lows, suggesting that supplies are in better shape. In addition, profits from producing fuels like diesel and gasoline from crude have also fallen.
