Oil rises as investors reassess data on U.S. inventories

by Jonathan Adams
oil stocks gain

Brent crude futures for May were up 31 cents, or 0.4%, at $86.40 a barrel while the more actively traded June contract added 32 cents, or 0.4%, to $85.73

Oil prices edged up on Thursday, following two successive sessions of decline, as investors re-evaluated the latest data on U.S. crude oil and gasoline inventories and returned to buying mode.

Brent crude futures for May were up 31 cents, or 0.4%, at $86.40 a barrel while the more actively traded June contract added 32 cents, or 0.4%, to $85.73 at 0415 GMT. The May contract expires on Thursday.

U.S. WTI crude futures for May delivery were up 39 cents, or 0.50%, to $81.74 a barrel.

Both benchmarks were on track to end higher for a third successive month, and were up nearly 4.5% from last month.

In the previous session, oil prices were pressured following last week’s unexpected rise in U.S. crude oil and gasoline inventories, led by a rise in crude imports and sluggish gasoline demand, according to Energy Information Administration (EIA) data.

However, the crude stock rise was smaller than the build projected by the American Petroleum Institute (API).

We expect U.S. inventories to rise less than normal in reflection of a global oil market in a slight deficit, Bjarne Schieldrop, chief commodities analyst at SEB Research, stated in a note.

This will likely hand support to the Brent crude oil price going forward, Schieldrop added.

Also providing support to prices were U.S. refinery utilisation rates, which increased 0.9 percentage points last week.

Recent disappointing inflation data affirms the case for the U.S. Fed to hold off on cutting its short-term interest rate target, a Fed governor said on Wednesday, but he did not rule out cutting rates later in the year.

The market is converging on a June start to reductions for both the Fed and the ECB, JPMorgan analysts said in a note. Lower interest rates support oil demand.

Investors will watch for cues from a meeting next week of the Joint Monitoring Ministerial Committee of producer group the Organisation of Petroleum Exporting Countries (OPEC) amid supply concerns over geopolitical risks.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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