Singapore — Oil prices hovered near four-month lows in Asia on Wednesday as markets digested an OPEC+ decision to boost supply later this year and following an increase in U.S. crude and refined products stocks.
Brent crude futures were up 1 cent at $77.53 a barrel by 0638 GMT, while U.S. West Texas Intermediate crude futures were down 2 cents at $73.23 a barrel.
Both contracts fell nearly a dollar on Tuesday to their lowest settlement levels since early February and had declined around $3 a barrel on Monday.
The slide followed news from the Organization of the Petroleum Exporting Countries (OPEC) and its allies of plans to increase supply from October despite recent signs of weakening demand growth.
“Brent remains under pressure as a corner of the market continues to view OPEC’s proposed taper timeline for the voluntary cuts as a binding commitment to increase by 500,000 barrels per day in Q4 2024 irrespective of the fundamental oil outlook or sentiment come summer’s end,” RBC Capital’s head of commodities research, Helima Croft, said in a market note.
However, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, has said OPEC+ would pause the unwinding of the cuts or reverse them if demand wasn’t strong enough to absorb the barrels.
“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 noted.
ING analysts led by Warren Patterson said crude oil supply is expected to tighten in the third quarter and that OPEC+’s plans to unwind supply cuts will take place only from October.
“Therefore, we believe the scale of the sell-off at the front end of the forward curve is overdone,” they added in a market note.
In the U.S., crude oil, gasoline and distillate stocks rose last week, according to sources citing American Petroleum Institute figures.
API figures showed crude stocks increased more than 4 million barrels in the week ended May 31, against analysts’ forecasts in a Reuters poll for a 2.3-million-barrel decline.
Independent energy analyst Tim Evans wrote that the crude figures in the API report “represents a clear bearish surprise.”
Gasoline stocks rose by more than 4 million barrels, twice the build expected by analysts.
The U.S. Energy Information Administration will publish official stockpiles data on Wednesday at 1430 GMT.
Data for last week is being closely watched by markets because it reflects fuel usage around the Memorial Day holiday, the start of the so-called U.S. driving season.
*Florence Tan & Emily Chow; Shariq Khan; editing: Sonali Paul, Neil Fullick & Michael Perry – Reuters
