(London) Oil prices hesitated between gains and losses on Wednesday after the first weekly data on US oil reserves, with the market still digesting the OPEC group meeting on Sunday.
At around 5:25 a.m. (Eastern time) (11:25 a.m. in Paris), the price of a barrel of North Sea Brent crude for delivery in August was up 0.13% at $77.62.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in July, gained some 0.10% to $73.32.
“The outlook for global demand is deteriorating, as illustrated by the latest report from the API (the federation of professionals in the sector, Editor’s note), which shows a surprising increase in stocks of American crude,” comments Ricardo Evangelista , analyst at ActivTrades.
The API estimated Tuesday that crude inventories climbed by about 4 million barrels for the week ended May 31.
Investors are now awaiting the publication of the weekly report from the US Energy Information Administration (EIA) on the state of oil stocks.
Furthermore, “the markets are still factoring in OPEC’s decision to ease its self-imposed production cuts” from fall 2024, adds Mr. Evangelista.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies in the OPEC alliance announced an extension of current production cuts until the end of September, before partially and gradually lifting them over the following 12 months. This will result in an increase in supply from October.
In total, the group could gradually reintroduce around 2.5 million barrels per day from October until September 2025, if it sticks to its plan.
Bjarne Schieldrop, analyst at Seb, points to “a change in strategy which is being done with much more finesse” by OPEC to favor production volumes over prices and regain market share.
Because the alliance “leaves an open door to modify its plan” by reserving the possibility of pausing or reintroducing barrels on the market if conditions do not allow it, he underlines.