SINGAPORE, April 25 Reuters Oil prices steadied on Thursday after settling lower in the previous day, as signs of retreating fuel demand in the U.S., the world39;s biggest oil user, contended with widening conflict risks in the key Middle East producing region.

Brent crude futures inched up 18 cents, or 0.2, to 88.20 a barrel at 0630 GMT, while U.S. West Texas Intermediate crude futures gained 13 cents, or 0.2, to 82.94 a barrel.

Data from the U.S. Energy Information Administration EIA on Wednesday showed that gasoline stockpiles fell less than forecast while distillate stockpiles rose against expectations of a decline, reflecting signs of slowing demand.

The falling fuel demand is occurring amid signs of cooling U.S. business activity in April and as strongerthanexpected inflation and employment data means the U.S. Federal Reserve is more likely to delay expected interest rate cuts, weighing on economic sentiment.

The current weakness in benchmark prices, after testing above 90 a barrel levels, is due to market sentiment refocusing on global economic headwinds over geopolitical tensions, said Emril Jamil, senior oil analyst at LSEG Oil Research.

Geopolitics aside, prices this quarter will be driven by factors including major producer supply cuts, economic data out of China and Eurozone, on top of incremental demand expectations as the Northern Hemisphere heads into summer amid expected tighter supply, said Jamil.

A better indication of the Fed39;s rate intentions…