International crude oil prices edged lower on Wednesday, June 5, after hitting a four-month low in the previous session despite the Organisation of Petroleum Exporting Countries (OPEC) extending the supply cuts till 2025. A surprise build in US crude stocks and a larger-than-expected rise in fuel stocks fuelled demand concerns among investors amid worries of a rise in supply later this year.
Brent crude futures were last down 24 cents, or 0.3 per cent, at $77.27 per barrel, while the US West Texas Intermediate crude futures eased 23 cents, or 0.3 per cent, to $73.02. Both contracts have fallen for five straight sessions and dropped more than one per cent on Tuesday to their lowest settlement levels since early February. Coming to domestic prices, crude oil futures were last up 0.16 per cent higher at ₹6,177 per barrel on the multi-commodity exchange (MCX).
OPEC verdict impact: What’s weighing on crude oil prices?
-US crude stocks jumped by 1.2 million barrels in the week to May 31, compared with analysts’ estimates for a draw of 2.3 million barrels, according to data from the US Energy Information Administration (EIA). However, the build was below the American Petroleum Institute’s reading of an increase of more than four million barrels.
-Gasoline inventories rose by 2.1 million barrels versus expectations for an increase of two million barrels, adding to demand concerns as the week reflected fuel usage around the Memorial Day holiday, which is traditionally viewed as the start of the US summer driving season.
-The price drop follows the recent policy verdict of the Organization of the Petroleum Exporting Countries and its allies (OPEC+). The oil producer group plans to increase supply from the fourth quarter despite recent signs of weakening demand growth. Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman said OPEC would pause the unwinding of the cuts or reverse them if demand wasn’t strong enough to absorb the barrels.
-Oil prices drew some support from data showing US private payrolls increased less than expected in May, with data for April revised lower. ADP’s employment report added to data on Tuesday which showed US job openings fell more than expected in April, which could help the US Federal Reserve’s fight against inflation and strengthen the case for cutting interest rates.
The US -could hasten the rate at which it replenishes the country’s Strategic Petroleum Reserve, Energy Secretary Jennifer Granholm told Reuters on Tuesday, adding that she believes the global oil market is well supplied.
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