Market Analysis

Oil Steady Amid Downward Pressure Ahead of U.S. Stockpile Data

Amos Simanungkalit · 30 May2.2K Views

Oil prices remained relatively stable on Thursday as the market awaited data on U.S. crude oil stockpiles, though the robust U.S. economic activity suggested borrowing costs might stay elevated for a longer period, potentially dampening demand.

At 0330 GMT, Brent futures slipped by 4 cents, or 0.05%, to $83.56 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped by 10 cents, or 0.13%, to $79.13 per barrel.

Market sources, citing American Petroleum Institute (API) figures from Wednesday, reported that U.S. crude oil and gasoline inventories fell last week, while distillates increased. The API data indicated crude stocks fell by 6.49 million barrels for the week ending May 24, gasoline inventories decreased by 452,000 barrels, and distillates rose by 2.045 million barrels.

Analysts had anticipated a 1.9 million barrel decline in U.S. crude inventories, a 0.4 million barrel rise in distillates, and a 1 million barrel increase in gasoline.

The U.S. Energy Information Administration (EIA) is scheduled to release its data later on Thursday.

Rising global oil inventories in April, driven by weak fuel demand, may support the case for OPEC+ producers, including the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, to maintain supply cuts when they meet on June 2, according to OPEC+ delegates and analysts.

"A key factor for oil prices moving forward could be the upcoming OPEC+ meeting this weekend, where members might extend current production cuts potentially until the end of the third quarter to support prices," Yeap added.

Oil markets have been pressured by expectations that the Federal Reserve will maintain higher interest rates for an extended period, with Brent hitting its lowest level in over three months on May 23.

U.S. economic activity expanded from early April through mid-May, but firms became more pessimistic about the future, while inflation rose at a modest pace, according to a Fed survey.

Higher borrowing costs tend to restrict funds and consumption, negatively impacting crude demand and prices. The Fed is now expected to cut rates in September at the earliest, a shift from the anticipated June start earlier this year.