Oil Prices Edge Up Despite Looming OPEC+ Supply Boost and Growing U.S. Stocks

Oil prices saw a modest rebound on Wednesday, even as the market anticipates an increase in supply later this year when OPEC+ begins to unwind its output cuts. U.S. jobs data and rising oil stocks also influenced trading.

Brent crude futures experienced a 0.3% increase to $77.78 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 0.3% to $73.49.

However, both benchmarks had dropped more than 1% on Tuesday, reaching their lowest settlement levels since early February. The recent decline followed news of OPEC+ plans to increase supply from the fourth quarter, despite signs of weakening demand growth.

Analysts are concerned about the potential oversupply in the market due to the planned supply boost. However, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, has assured that OPEC+ will pause or reverse the unwinding of cuts if demand fails to absorb the additional barrels.

The market received some support from data revealing a larger-than-expected drop in U.S. job openings in April, signaling a softening labor market, which could aid the Federal Reserve’s fight against inflation and strengthen the case for interest rate cuts.

However, rising U.S. crude stocks by over 4 million barrels in the week ending May 31, according to sources citing American Petroleum Institute figures, counteracted this positive sentiment.

The U.S. Energy Information Administration will release official stockpile data later on Wednesday, which is closely watched by markets as it reflects fuel usage during the Memorial Day holiday, marking the start of the U.S. driving season.

While some analysts remain bullish on the oil market, anticipating demand growth to outpace supply growth in the coming months, the combination of a looming supply boost from OPEC+ and growing U.S. stocks could continue to pressure prices in the short term.