Oil Inventory Report: Oil Slips on Higher US Inventories

OIL INVENTORY REPORT – An unexpected increase in US crude inventories pushed oil prices further down in the Asian morning trade.

On top of that, reports surfaced that Russian state producer Rosneft is reconsidering its pact with the Organization of Petroleum Exporting Countries to curb supplies.

US West Texas Intermediate Futures were 0.75% lower at $53.08 per barrel. From the peak price posted in April 2018, the benchmark crude is around 20% lower.

Prices closed Tuesday’s trade 0.4% higher than the day before, however.

International Brent Oil Futures were 0.44% lower at $61.70 per barrel. Prices closed Tuesday’s session with a 1.1% increase after they fell almost 13% in the previous four sessions.

According to American Petroleum Institute (API) data, US crude stocks gained unexpectedly last week.

Gasoline and distillate inventories also grew more than expected.

Crude inventories jumped by 3.5 million barrels in the week to May 31 to 478 million, according to data. This beats expectations of a decrease by 849,000 barrels.

Later in the day, the official inventory data from the US Energy Information Administration (EIA) is coming out.

“It was a very bearish number, and if confirmed by the EIA it will hammer prices,” said an analyst.

OPEC de-facto leader Saudi Arabia hinted that it would extend the agreed supplied cut on oil production to support prices, according to reports.

According to a news agency, the head of Russian oil giant Rosneft Igor Sechin said, “Does it make sense for (Russia) to reduce (oil output) if the US immediately takes (our) market share?”

Further, it was also reported that he suggested Russia to pump output, expecting to seek compensation from the government if the cuts were prolonged.

OPEC, with the support of its allies including Russia, has been cutting down on oil output since the beginning of the year to provide support to the market.

The group is expected to have a decision this month or in July over whether they would continue curbing supply or not.