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Investing.com -- Oil prices fell sharply Thursday, handing back the previous session’s gains after a rise in U.S. crude stockpiles, while developments in the war between Israel and Hamas continued to attract attention.
By 09:20 ET (13.20 GMT), the U.S. crude futures traded 2.4% lower at $83.33 a barrel, while the Brent contract dropped 2.1% to $88.28 a barrel.
Uncertainty over Gaza conflict dominates
The benchmark oil contracts settled nearly 2% higher on Wednesday, helped by the news that Israeli ground forces had pushed into Gaza overnight to attack Hamas targets.
Israeli Prime Minister Benjamin Netanyahu said it was "preparing for a ground invasion" that could be one of several.
However, this tone has not lasted after the Wall Street Journal reported that Israel has agreed to delay a full-blown invasion of Gaza for now.
“The uncertainty around the Israel-Hamas conflict continues to be the major driving force behind the volatile crude oil prices currently. The sell-off in the broader financial market also appears to be weighing on crude oil prices today,” analysts at ING said, in a note.
U.S. oil stocks grow more than expected
Also weighing was U.S. oil inventories growing more than expected in the week to October 20, with a build in gasoline stockpiles pointing to some cooling fuel demand.
But overall U.S. oil stockpiles remained close to historic lows, as the country ramped up oil exports to plug a supply hole stemming from Saudi Arabia and Russia.
“Commercial crude oil inventories increased by 1.4MMbbls over the week, driven by firm imports, slow exports, and softer domestic demand,” added ING.
Eurozone remains weak - Lagarde
The European Central Bank left interest rates unchanged as expected on Thursday, snapping an unprecedented streak of 10 consecutive rate hikes.
"The euro area economy remains weak," ECB President Christine Lagarde said at a news conference after the policy decision.
This followed business activity data released earlier in the week which pointed towards Germany, the region’s dominant economy, heading towards a recession, which is likely to weigh on oil demand in this important energy consuming area.
U.S. GDP growth surges in 3Q
By contrast, the U.S. economy grew at its fastest pace in nearly two years in the third quarter, as gross domestic product increased at a 4.9% annualized rate last quarter, the fastest since the fourth quarter of 2021.
The Federal Reserve is widely expected to keep interest rates unchanged at its meeting next week, but this strong growth points to the central policy makers agreeing to keep rates higher for longer to combat inflation, potentially weighing on further economic activity.
(Ambar Warrick contributed to this article.)
