May 08, 2024 (MLN): Global oil prices fell over 1% on Wednesday after U.S. data showed huge stockpiles in crude and fuel inventories, alongside cautious supply expectations ahead of an OPEC+ policy meeting next month.
Brent crude traded near $81.9 per barrel, down by 1.07% on the day.
While West Texas Intermediate crude (WTI) was at $77.06 per barrel, down by 1.23% on the day.
U.S. crude stocks rose by 509,000 barrels in the week ended May 03, market sources said, citing American Petroleum Institute figures. Gasoline and distillate fuel inventories also rose, they said, as Reuters reported.
"API numbers released overnight were moderately bearish due to stock builds in both crude and products… Concern over weaker-than-usual U.S. gasoline demand and this stock-build have weighed on the prompt RBOB gasoline crack," ING analysts said in a client note.
Official U.S. government data on stockpiles is due at 07:30pm PST. Analysts polled by Reuters expect U.S. crude oil inventories to have fallen by about 1.1 million barrels last week.
Cautious expectations on supply cuts from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) ahead of a June 1 policy meeting also weighed on markets.
"Oil prices have come under further pressure as noise around OPEC+ production policy grows," the ING analysts said. "Expectations are that members will extend their additional voluntary supply cuts beyond the second quarter of this year."
The Dow Jones Industrial Average and the S&P 500 clung onto gains to close higher on Tuesday, extending recent winning streaks fueled by renewed expectations that the Federal Reserve will cut interest rates this year.
Meanwhile, hopes of a ceasefire in Gaza have also put pressure on oil prices in recent sessions, with some analysts saying the risk premium on oil declined in tandem.
"The fall in oil prices since Iran and Israel's back-and-forth attacks suggests that some of the risk premium in prices has now unwound," said economist Bill Weatherburn from Capital Economics in a client note.
"Prices continue to be supported by OPEC+ production cuts but we suspect that members will gradually unwind these cuts from July, pushing oil prices lower," he added.
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Posted on: 2024-05-08T13:25:40+05:00
