Oil Steadies Near 4-Month Lows as API Sees Swelling Stocks

VIENNA (DTN) -- West Texas Intermediate futures closest to expiration on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange steadied near four-month lows Wednesday morning. This followed steep losses earlier this week resulting from OPEC+ surprisingly announcing plans to ramp up production in the fourth quarter, and a bleaker turning outlook on demand growth. Late Tuesday, the American Petroleum Institute reported inventory builds across the board.

U.S. commercial crude oil stocks unexpectedly added 4.052 million barrels (bbls) in the week ended May 31, with inventories at the WTI delivery point in Cushing, Oklahoma, rising 983,000 bbls, according to the API. Oil product inventories also expanded, with gasoline stocks jumping more than 4 million bbls last week, and distillate fuel oil stocks rising 1.975 million bbls. The large stock builds may hint at weaker-than-expected demand, amplifying oversupply concerns sparked by Sunday's OPEC+ announcement. The Energy Information Administration is set to publish last week's data at 10:30 a.m. EDT Wednesday.

If demand continues to trail expectations in the second half of the year, OPEC+ might be forced to postpone the unwinding of some 2.2 million barrels per day (bpd) in voluntary extra production cuts, even if it means losing more market share.

Near 7:00 a.m. EDT, WTI futures for July delivery gained $0.18 to trade near $73.43 bbl, and Brent for August delivery rose $0.24 bbl to $77.76. RBOB for July delivery traded near $2.3408 gal, down $0.0087, and ULSD for July delivery gained $0.0088 gal to $2.2947.

Karim Bastati can be reached at karim.bastati@dtn.com