Crude Oil Futures Rise Despite Surprise US Supply Increase Ahead of OPEC+ Meeting

Crude oil futures rose on Thursday, even as official U.S. data showed a surprise increase in supply last week ahead of a production decision at an OPEC+ meeting on Sunday.WTI Crude OilPrices still rose back above $70 a barrel for the first time in nearly a week.

Due to concerns about the global economic outlook, oil prices fell sharply in May, and entering June, oil prices are saying goodbye to the haze of the previous month.

energy commodity prices

• West Texas Intermediate (WTI) crude futures for July delivery rose $2.01, or 3%, to $70.10 a barrel, recovering from the lowest since March 20 hit the previous day.
• delivered in augustBrent Crude Oil (Brent) futures rose $1.68, or 2.3%, to $74.28 a barrel.
• Gasoline futures for July delivery fell 0.3% to settle at $2.44 a gallon.
• delivered in julyHot Fuel FuturesPrices rose 2.8 percent to $2.31 a gallon.
• Natural gas futures for July delivery fell 4.8% to settle at $2.16 per million Btu.

supply report

Tariq Zahir, managing director of Tyche Capital Advisors, said that in general, the U.S. oil supply data was bearish but oil prices remained strong, which is not surprising because several factors will come into play in the coming days and weeks, including Sunday’s The OPEC+ meeting may announce further production cuts.

The Energy Information Administration (EIA) reported on Thursday (1st) that US commercial crude oil inventories increased by 4.5 million barrels last week (5/26).

According to the S&P Global Commodity Insights survey, analysts on average expected last week (5/26) U.S. crude oil supply fell by 3.4 million barrels. The American Petroleum Institute (API) reported late on Wednesday that U.S. crude inventories rose by 5.2 million barrels last week.

DTN senior market analyst Troy Vincent said the build in crude inventories largely reflected a rebound in net exports. Net exports rebounded after a week of strong exports and extremely weak imports amid constrained domestic refinery operations.

The EIA report also showed that US gasoline inventories fell by 200,000 barrels last week, while distillate supplies rose by 1 million barrels.

Analysts on average expected a draw of 500,000 barrels in gasoline inventories and a draw of 280,000 barrels in distillate inventories last week, according to S&P Global Commodity Insights.

Elsewhere, crude inventories at the Nymex delivery hub in Cushing, Oklahoma, rose by 1.7 million barrels for the week, while oil inventories in the Strategic Petroleum Reserve (SPR) fell by 2.5 million barrels.

market drivers

WTI oil prices fell more than 11% last month, the biggest monthly drop since November 2021, and Brent oil prices fell 8.7% in May, the biggest monthly drop since November 2022.

Vincent of DTN pointed out that global manufacturing, industrial and freight data continue to reflect the obvious weakness of energy and oil-intensive business activities, coupled with the strong growth of non-OPEC crude oil supply, and EIA also admitted that it underestimated US crude oil production, released on Wednesday In the latest monthly report, crude oil production in March was raised by nearly 500,000 barrels per day. So pressure is mounting on OPEC+, especially Russia, to follow through on their announced production cuts if they want to stem falling prices.

The OPEC+ meeting (the Organization of the Petroleum Exporting Countries and its allies, including Russia) on June 4 is currently in focus.

Zahir of Tyche Capital Advisors said that if there is another production cut news at this meeting, it will push oil prices, while OPEC wants to see higher oil prices because its market share has been hit by Russia’s oil sales to China.

Saudi Arabia’s energy minister warned short-sellers to be “cautious”, leading analysts to expect a resolution to extend output cuts at the OPEC+ meeting, however, Russia’s deputy prime minister later said he saw no need for additional measures.

Stephen Innes, general manager of SPI Asset Management, said that oil market participants expect that the nine major OPEC+ oil-producing countries that have announced voluntary production cuts in April will keep their output unchanged, but they will certainly make some remarks, and OPEC may also increase the scale of production cuts. Expand to smaller oil producers. However, it remains to be seen whether OPEC’s move will stem the fall in prices as Russia does not plan to cooperate.

Victoria Dircksen, commodity analyst at Schneider Electric, said the U.S. debt limit bill was passed by an absolute majority in the House of Representatives on Wednesday and will now go to the Senate, where it is expected to pass as well. Prospects for oil demand growth in oil-consuming countries.

The EIA reported on Thursday that U.S. natural gas supplies rose by 110 billion cubic feet last week (ended 5/26). Natural gas futures closed down nearly 5% following the report.

According to S&P Global Commodity Insights survey, analysts on average expected last week (5/26) US natural gas supply increased by 107 billion cubic feet. During the same period last year, natural gas supply increased by just 82 billion cubic feet.