Oil prices were on track for weekly losses with reduced supply risks in the Middle East based on hopes of a cease-fire between Israel and Hamas from their negotiations, and with projected US demand dwindling over economic concerns after the US Federal Reserve (Fed) left the interest rate policy unchanged.
International benchmark Brent crude traded at $83.94 per barrel at 2.29 p.m. local time (1129 GMT) on Friday, falling by around 6.2% relative to the closing price of $89.50 a barrel on Friday last week.
West Texas Intermediate (WTI), the American benchmark, traded at $79.17 a barrel at the same time on Friday, for a drop of about 5.6% from last Friday's session that closed at $83.85 per barrel.
Prices started the week on a declining trend over the increasing prospect of a cease-fire between Israel and Hamas.
A potential cease-fire deal in the Middle East eased concerns of an escalation of the regional conflict and disruptions to supply after prices tested the highest levels of the year.
Global calls for a cease-fire have been growing as the war in the Gaza Strip enters its seventh month.
Hamas was expected to deliver its response to the truce proposal late this week. However, on Tuesday, Israeli Prime Minister Benjamin Netanyahu vowed to invade Rafah in the southern Gaza Strip, despite reports of a possible deal.
The White House said it would continue to oppose an Israeli invasion of Rafah, home to more than 1.4 million displaced Palestinians.
Meanwhile, concerns over disruptions to global supply routes through the Red Sea continue as the Yemeni Houthi group targets Israeli or Israeli-linked vessels through the Red Sea, which the US is retaliating against.
Data released by the Energy Information Administration (EIA) on Wednesday showed a rise of 7.3 million barrels in US commercial crude oil stocks last week, against market expectations of a fall of 2.3 million barrels.
Over the same period, strategic petroleum reserves and gasoline inventories also increased by about 600,000 and 300,00 barrels, respectively.
The inventory build, showing a fall in US demand appetite ahead of the driving season, triggered a further drop in oil prices.
Meanwhile, uncertainties about the Fed interest rate policy continued to influence oil prices over the week, as generally high interest rates boost the value of the US dollar, making oil more expensive for holders of other currencies.
Later on Wednesday, oil prices plummeted to the lowest levels in the past seven weeks, with projected US demand dwindling over economic concerns after the Fed left the interest rate policy unchanged.
Experts believe that keeping interest rates at high levels for a sustained period may pose risks to the oil demand outlook.
Higher prices were, however, bolstered by the possibility that the OPEC+ group, led by Saudi Arabia and Russia, would continue to reduce production.
The price declines come just weeks ahead of the OPEC+ group meeting on June 1. Experts predict that if oil demand does not improve by June, OPEC, which needs higher prices, could agree to keep its voluntary production cuts of 2.2 million barrels per day.
By Firdevs Yuksel
Anadolu Agency
energy@aa.com.tr