Oil prices edged lower, as indications of easing supply concerns took precedence, while market attention turned towards upcoming U.S. stockpiles data expected later in the day and on Wednesday.
Brent crude futures concluded 17 cents down at $83.16 per barrel, while U.S. West Texas Intermediate crude futures saw a slight decrease of 10 cents, closing at $78.38.
Following settlement, prices dipped further in thin trading after reports surfaced indicating a surge in U.S. crude and fuel stocks last week, as per data from the American Petroleum Institute (API). This rise in inventories, typically signaling weak demand, contrasted analysts’ projections in recent weeks.
Analysts surveyed by Reuters had anticipated a decline in U.S. oil and fuel stockpiles, with official data from the U.S. Energy Information Administration (EIA) scheduled for release at 10:30 a.m. ET (1430 GMT) on Wednesday.
By 4:48 p.m. ET, Brent crude futures were trading at $82.98 per barrel, 35 cents lower than Monday’s close, while WTI futures slid 23 cents to $78.26 per barrel. U.S. gasoline futures and ultra-low sulfur diesel futures also registered declines in extended trading.
Mizuho analyst Robert Yawger remarked, “If EIA shows fewer barrels are going into the refineries, then that is a problem for crude oil here,” adding, “Heading into peak summer driving season we should be drawing, not building.
Current global inventory data reveals that crude oil and petroleum supplies are surpassing forecasts by 1.1 million barrels per day in developed economies, according to an analysis by energy brokerage StoneX. StoneX analyst Alex Hodes noted, “Global inventories remain in a building phase and has accelerated recently.”
The EIA revised its forecasts for this year’s world oil and liquid fuels output upwards while lowering demand expectations, signaling a well-supplied market compared to previous forecasts indicating under-supply.
The spread between the first-month Brent contract and the six-month contract decreased to $2.90 a barrel on Tuesday, marking its lowest level since mid-February, suggesting market participants are betting on supply relief.
Last week, Brent and WTI experienced their sharpest weekly losses in three months following weak U.S. jobs data, which fueled hopes for interest rate cuts.
Tuesday’s session offered some support for oil prices with news of a U.S. government initiative to purchase over 3 million barrels of oil for the Strategic Petroleum Reserve (SPR).
Despite escalating tensions in the Middle East, including Israeli military actions in Gaza, oil traders appeared more focused on uncertainties surrounding global economic growth prospects and their potential impact on oil demand, according to Ricardo Evangelista, senior analyst at financial brokerage ActivTrades.