Energy
Wednesday, May 8th, 2024 5:19 pm EDT
Key Points
- Crude oil futures rose on Wednesday, rebounding from earlier losses as U.S. crude inventories fell by 1.4 million barrels in the first week of May, surprising analysts who expected a build-up.
- Recent pressure on oil prices resulted from rising inventories, particularly seen in the surge of U.S. stockpiles in the last week of April, leading to declines from recent peak prices.
- Despite the softening oil market indicators, analysts at Morgan Stanley anticipate seasonal strength in the coming months, with expectations of a robust outlook for summer oil demand. OPEC+ is likely to extend production cuts until the end of the year, supporting a projected 2 million barrel per day deficit in the third quarter, potentially pushing Brent prices to $90 over the summer.
Crude oil futures experienced a rebound on Wednesday, reversing earlier losses as U.S. crude inventories registered a decline. The support for oil prices stemmed from a surprising 1.4 million-barrel reduction in U.S. commercial crude stockpiles during the first week of May, contrary to industry expectations of a 509,000-barrel build. Despite recent pressures on prices due to rising inventories, particularly notable in the last week of April, analysts from Morgan Stanley suggest that the oil market is not currently tight, yet anticipate seasonal strength in the coming months. West Texas Intermediate (WTI) crude for June delivery reached $78.73 a barrel, up 34 cents, or 0.43%, with a year-to-date increase of 9.8%. Meanwhile, Brent crude for July delivery rose to $83.37 a barrel, up 21 cents, or 0.26%, with a year-to-date rise of 8.2%. Conversely, RBOB Gasoline for June delivery declined to $2.52 per gallon, down 1.05%, but year-to-date, gasoline futures saw a rise of approximately 19%. Natural Gas for June delivery also decreased slightly to $2.21 per thousand cubic feet, down 0.05%, with a year-to-date decline of 12%. Despite a 7% decrease in oil prices since reaching April highs, driven by concerns over potential conflict between Iran and Israel, the outlook for summer oil demand remains robust. Morgan Stanley predicts that OPEC+ will likely extend production cuts until the end of the year, supporting a projected 2 million barrel per day deficit in the third quarter and potentially pushing Brent prices to $90 over the summer. OPEC and its allies, including Russia, are scheduled to meet on June 1 to discuss production policy, while CIA Director William Burns’ visit to Israel indicates ongoing negotiations regarding the Gaza cease-fire in Cairo.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/08/oil-prices-fall-more-than-1percent-as-market-softens-on-rising-inventories.html
