Oil prices drop for third consecutive session

May 22, 2024 (MLN): Oil prices extended losses following an expected rise in US crude inventories that will add to bearish signs for the market.

Brent crude for a third session to $81.75 per barrel, down by 1.36% on the day.

While West Texas Intermediate crude (WTI) was at $77.52 per barrel, down by 1.45% on the day.

The American Petroleum Institute reported crude stockpiles rose by 2.5 million barrels last week, according to people familiar as reported by Bloomberg.

If confirmed by official data Wednesday, it would be the first gain this month.

Oil futures are still higher this year due to OPEC+ supply cuts, but some market measures are starting to point to weakness.

The prompt spread for Brent is nearing a bearish contango structure, which would signal ample supply.

“Fundamentals are weak,” said Gao Jian, an analyst at Shandong-based Qisheng Futures Co., adding that traders will be focused on the upcoming OPEC+ meeting, which “will set the course” for the market in the second half.

The producer group is scheduled to meet in early June and a rollover of existing supply curbs is expected by most market watchers surveyed by Bloomberg.

The group has been keeping roughly 2 million barrels a day offline this year.

Other metrics that are showing weakness include the Brent DFL — a measure of Dated Brent relative to futures — and the Brent-Dubai EFS. Money managers have also trimmed their bets on rising prices.

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