WASHINGTON (DTN) -- After choppy trading for most of the session, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled mixed Tuesday. Traders are waiting for the release of weekly inventory data in the United States, with market consensus calling for commercial crude oil inventories to have declined again during the first week of June as global inventories continued a destocking pattern heading into summer.
U.S. Energy Information Administration estimates global oil inventories declined for each of the seven consecutive quarters from the third-quarter 2020 to the first quarter, leaving stockpiles well below the five-year average. In the United States, commercial oil inventories stand 15% below the five-year average after plunging more than 9 million barrels (bbl) over the past three weeks alone.
Analysts expect domestic stockpiles to likely decline again, seen down 1.9 million bbl during the first week of June. Gasoline inventory is expected to have increased by 300,000 bbl from the previous week, while distillate stocks are seen to have risen 800,000 bbl. The American Petroleum Institute will release its weekly rundown of inventory data at 4:30 p.m. EDT, followed by the official report from the EIA Wednesday morning.
Earlier in the session, oil complex came under selling pressure after The World Bank sharply downgraded its outlook for the global economy this year, pointing to the devastating impact of Russia's war in Ukraine, the prospect of widespread food shortages and concern over the potential return of "stagflation" -- a mix of high inflation and sluggish growth unseen for more than four decades.
"For many countries, recession will be hard to avoid," said World Bank President David Malpass, adding "faster-than-expected tightening of financial conditions could push some countries into the type of debt crisis seen in the 1980s."
The World Bank slashed its global economic growth forecast to 2.9% this year, down from 4.1% seen in early January. The bank doesn't expect a much brighter outlook in 2023 and 2024 either, with annualized growth of just 3% for both years. For the United States alone, The World Bank has slashed its growth forecast to 2.5% this year from 5.7% in 2021 and from the 3.7% it had forecast in January. For the 19 European countries that share the euro currency, it downgraded the growth outlook to 2.5% this year from 5.4% last year and from the 4.2% it had expected in January.
Separately, Bloomberg News reported on Tuesday that India's largest refiners are collectively working on finalizing and securing new six-month supply contracts with Russia's state-oil giant Rosneft. These supply agreements, if concluded, will be separate and on top of shipments that India already buys from Russia. People familiar with the negotiations suggest the new contracts would replace purchases of oil cargoes India procures on the spot market. Details on volume and pricing are still being negotiated with Indian banks that are set to fully finance all cargoes, while Rosneft would be responsible for shipping and insurance. The news comes atop reports suggesting China is actively engaging Moscow to replenish its crude stockpiles with heavily discounted Russian barrels that have been shunned by Western traders.
At settlement, NYMEX West Texas Intermediate for July delivery advanced $0.91 to $119.41 per bbl, while international crude benchmark Brent contract for August settled the session above $120 per bbl at $120.57. NYMEX RBOB July contract declined 3.53 cents to $4.1577 per gallon and ULSD July futures dropped 3.95 cents to $4.3206 per gallon.
Liubov Georges can be reached at email@example.com