By Adedapo Adesanya
Oil prices extended losses on Tuesday on a report that Israeli Prime Minister Benjamin Netanyahu will hold a meeting for a diplomatic solution to the war in Lebanon.
Brent crude futures lost 30 cents or 0.4 per cent to trade at $71.12 a barrel and the US West Texas Intermediate (WTI) crude shed 17 cents or 0.3 per cent to $67.21 a barrel.
This adds to a more than 6 per cent drop in the previous session on Monday, after Israel carried out its retaliatory strike on Iran at the weekend, striking at military targets instead of the oil infrastructure.
The market priced down after it was reported that Israel’s Prime Minister, Mr Benjamin Netanyahu will hold a meeting with ministers and the heads of the country’s military and intelligence community about talks for a diplomatic solution to the war in Lebanon.
Recall that Israel is currently embroiled in fighting with two separate groups, Hamas and Hezbollah backed by Iran in the Middle East.
Meanwhile, Iran said it will use all available tools to respond to Israel’s weekend attack. If this happens, it could create a fresh wave of tensions.
Also pressuring prices is the declining oil demand from China, the world’s largest crude oil importer, which continues to impact global oil consumption and prices.
Market analysts note that demand will return to normal growth rates after Chinese President Xi Jinping introduces new stimulus measures to the economy.
According to the American Petroleum Institute (API), crude oil inventories in the US fell by 573,000 barrels for the week ending October 25. The API reported a 1.643-million-barrel build in crude inventories for the week prior.
So far this year, crude oil inventories in the world’s largest oil producer have slumped by just over 6 million barrels since the beginning of the year, according to API data.
Official US government data from the Energy Information Administration (EIA) is expected later on Wednesday.
The US Federal Reserve will cut interest rates by 25 basis points on November 7. Lower interest rates cut the cost of borrowing, which can buoy economic activity and boost oil demand.