Oil prices remained near four-month lows on Wednesday as markets anticipated a supply increase later this year when OPEC+ begins to unwind some output cuts. The market also reacted to U.S. jobs data and higher oil stockpiles.
By 0825 GMT, Brent crude futures rose 26 cents, or 0.3%, to $77.78 a barrel. U.S. West Texas Intermediate (WTI) crude futures increased 24 cents, or 0.3%, to $73.49 a barrel. Both contracts had fallen more than 1% on Tuesday, reaching their lowest settlement levels since early February, after a decline of about $3 a barrel on Monday.
The recent slide in prices followed news from the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) about plans to increase supply from the fourth quarter, despite signs of weakening demand growth.
“The abundant supply picture at present undoubtedly is generating queasiness even from those not in the perennial OPEC-skeptic camp,” said Helima Croft, head of commodities research at RBC Capital, in a market note.
However, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman indicated that OPEC+ might pause or reverse the unwinding of cuts if demand does not sufficiently absorb the increased supply. “The intention has always been to slow roll the barrels back in and not to send the market into a tailspin with a supply surge,” Croft added.
Oil prices found some support from data showing U.S. job openings fell more than expected in April, potentially aiding the Federal Reserve’s fight against inflation and bolstering the case for cutting interest rates. “Yesterday’s U.S. job data hints at a softer labor market and a September rate cut from the Fed,” noted PVM Oil analyst Tamas Varga.
Meanwhile, U.S. crude stocks increased by more than 4 million barrels in the week ended May 31, according to sources citing American Petroleum Institute figures. Analysts polled by Reuters had forecast a 2.3 million barrel decline. Gasoline stocks also rose by over 4 million barrels, twice the build expected by analysts.
“Renewed inventory draws are needed to push oil prices higher,” said UBS analyst Giovanni Staunovo, who remains bullish on expectations that oil supply growth will lag demand growth over the coming months.
The U.S. Energy Information Administration (EIA) is set to publish official stockpile data at 1430 GMT on Wednesday. This data is being closely watched as it reflects fuel usage around the Memorial Day holiday, marking the start of the U.S. driving season.
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