Oil declines as Middle East supply concerns are offset by economic concerns

Oil fell for a fourth day on Wednesday as concerns about slowing European demand outweighed concerns about Middle East supply disruptions caused by the Israel-Hamas conflict in Gaza.

As of 06:27 GMT, U.S. West Texas Intermediate crude futures were down 31 cents, or 0.4%, to $83.43 a barrel, while Brent crude futures fell 28 cents, or 0.3%, to $87.79 a barrel.

This month's unexpected decline in business activity figures for the Euro Zone raised concerns that the region would enter a recession and hampered the forecast for oil demand. According to Euroilstock data, the region's oil refineries have been using less crude overall than they did a year ago due to slow economic development.

In order to provide humanitarian aid to besieged Palestinian civilians, countries are pushing for a pause or ceasefire in the fighting between Israel and Hamas in the Gaza Strip. The leaders of the United States and Saudi Arabia discussed efforts on Tuesday to keep the conflict from spreading to potentially include major producer Iran.

Mizuho Bank's head of strategy and economics, Vishnu Varthan, noted in a note that the decline in oil prices had coincided with surprisingly weak European PMIs. This suggests that there has been some softening of demand rather than a complete abatement of supply disruption threats related to war.

Given that China, the world's largest oil importer, has approved a bill to issue 1 trillion yuan ($137 billion) in sovereign bonds and permit local governments to issue additional debt from their 2024 quota in order to stimulate the economy, crude prices may find some support.

However, in an effort to streamline its enormous oil processing industry and reduce carbon emissions, Beijing set a cap on the amount of crude oil it can refine, set at one billion metric tons by 2025.