Oil declines as US inventories increase

In the early hours of Wednesday’s Asian trading session, oil prices experienced a decline amidst indications of increased crude and fuel inventories in the United States. This trend suggested a potential softening in demand, prompting a cautious stance among investors regarding supply expectations ahead of the upcoming OPEC+ bloc meeting next month.

Brent crude futures slipped by 30 cents, marking a 0.36 percent decrease to reach $82.86 per barrel by 0348 GMT. Similarly, US West Texas Intermediate crude futures dipped by 25 cents, representing a 0.32 percent drop to settle at $78.13 per barrel.

In the previous session, both crude oil benchmarks witnessed modest declines, attributed partly to signals of easing supply constraints and subdued global demand for oil following the release of the International Energy Agency’s forecast report on Tuesday.

Market sources, citing figures from the American Petroleum Institute, reported a notable increase of 509,000 barrels in US crude inventories for the week ending May 3. Additionally, gasoline and distillate stocks also registered gains.

Attention now turns to the official government data on crude and fuel inventories in the United States, scheduled for release at 1430 GMT. Analysts surveyed by Reuters anticipate a decline of approximately 1.1 million barrels in US crude inventories for the previous week.

The market sentiment remains cautious regarding potential supply cuts from the Organization of the Petroleum Exporting Countries (OPEC) and its allies within the OPEC+ bloc ahead of the policy meeting scheduled for June 1. Analysts from ING noted that oil prices have faced additional pressure amidst the uncertainty surrounding OPEC+ production policy, with expectations leaning towards member states extending voluntary supply cuts beyond the second quarter of the year.

Furthermore, hopes for a ceasefire in the Gaza Strip have added to the downward pressure on oil prices in recent trading sessions, highlighting the significance of geopolitical developments in shaping market dynamics.