Oil edges lower as traders look to OPEC+ meeting, US inventories

May 30, 2024 (MLN): Oil edged lower on Thursday with traders eyeing US stockpile data and an OPEC+ meeting on the weekend for more clarity on the supply and demand outlook.

Brent crude traded near $83.25 per barrel, down by 0.42% on the day. It closed 0.6% lower on Wednesday.

While West Texas Intermediate crude (WTI) was at $78.9 per barrel, down 0.42%.

Commodities followed bonds and stocks lower on Wednesday after a disappointing sale of US Treasuries., as Bloomberg reported.

That offset nervousness due to another attack on a ship in the Red Sea, and Israeli comments that it probably wouldn’t be able to defeat Hamas before the end of this year.

Oil has risen this year on geopolitical conflicts and production curbs by the Organization of the Petroleum Exporting Countries and its allies.

The group will likely consider factors including a drop in prices over the past month, a weaker Chinese demand outlook and healthy supplies from the Americas when it meets online on Sunday.

It’s expected to prolong output cuts into the second half of 2024.

“There’s some caution in the market, with attention on slowing consumption just before the high demand summer season,” said Will Sungchil Yun, a senior commodities analyst at SI Securities Corp. “But a surprise from OPEC+ can’t be completely ruled out and that could drive prices immediately higher.”

The market will also be looking at official US oil and fuel stockpiles data due later on Thursday for a read on demand as the summer driving season gets underway.

US crude inventories fell by 6.49 million barrels last week, according to the American Petroleum Institute, which would be the largest drop since January if confirmed by official figures.

Meanwhile, the prompt timespread for Brent crude is getting close to a bearish contango structure that indicates supply is abundant when compared to demand.

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