Energy
Friday, May 10th, 2024 3:37 pm EDT
Key Points
- Crude oil futures rose on Wednesday, recovering earlier losses as U.S. crude inventories declined by 1.4 million barrels in the first week of May, contrasting with industry data showing a buildup of 509,000 barrels.
- Oil prices had faced pressure recently due to rising inventories, particularly a surge in U.S. stockpiles in late April, leading to softer oil market indicators and a decline from recent peaks, as noted by Morgan Stanley analysts.
- Despite the recent downturn, the outlook for summer oil demand remains robust, with expectations that OPEC+ will extend production cuts until year-end, potentially resulting in a 2 million barrel per day deficit in the third quarter and Brent prices reaching $90 over the summer. OPEC and allies, including Russia, are set to discuss production policy on June 1, with no current discussions within OPEC+ of increasing oil output. Additionally, CIA Director William Burns is expected to engage in discussions on Gaza cease-fire negotiations during his visit to Israel.
Crude oil futures experienced a rebound on Wednesday, recovering from earlier losses as U.S. crude inventories showed a decline. The Energy Information Administration reported a surprising drop of 1.4 million barrels in U.S. commercial crude stockpiles during the first week of May, contrary to industry data suggesting a buildup of 509,000 barrels. Recent pressure on oil prices stemmed from rising inventories, particularly evident in the surge of U.S. stockpiles in late April. Despite these challenges, Morgan Stanley analysts anticipate seasonal strength in the oil market in the coming months. Closing energy prices for the day included the West Texas Intermediate (WTI) June contract at $78.99 per barrel, up 0.78%, and the Brent July contract at $83.58 per barrel, up 0.51%. While crude oil has seen a year-to-date rise of 10%, gasoline futures, represented by the RBOB Gasoline June contract, are up approximately 20%. Natural gas, however, experienced a downturn, with the June contract at $2.19 per thousand cubic feet, down 0.91% year to date. Despite a more than 7% decline since April highs, driven by fears of conflict between Iran and Israel, summer oil demand is expected to remain robust. Morgan Stanley forecasts that OPEC+ will extend production cuts until year-end, potentially leading to a 2 million barrel per day deficit in the third quarter and Brent prices reaching $90 over the summer. The upcoming OPEC+ meeting on June 1 will likely address this production policy, with Russian Deputy Prime Minister Alexander Novak indicating no current discussions on increasing oil output within OPEC+. Additionally, CIA Director William Burns’ visit to Israel is expected to involve discussions on the Gaza cease-fire negotiations in Cairo, providing further context to geopolitical factors influencing oil markets.
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
