Washington, June 6 (FN Representative) Oil prices increased on Wednesday for the first time in six days, but the recovery was modest after data showed more builds in US crude and fuel stockpiles that raised questions about demand ahead of the summer travel period for Americans. The US Energy Information Administration said crude oil balances rose by more than one million barrels last week to offset some of the prior week’s drop of over four million barrels, while inventories increased by more than two million barrels for gasoline and over three million for distillates. Oil prices on the New York Mercantile Exchange began Wednesday’s trading on a positive note as buyers entered the market enticed by crude contracts made cheaper by five days of losses. Following the data on US crude and fuel builds, the market fell from its highs of the day.By 11:48 a.m. in New York (16:48 GMT), the front-month July contract for US-origin West Texas Intermediate crude was up 32 cents, or 0.5%, at $73.57 per barrel after rising to $73.89 earlier. The session low was $72.82, the lowest price for a US crude benchmark since February. The front-month August contract for UK-origin Brent crude, the global benchmark for oil, was up 41 cents, or 0.5%, at $77.93. Brent’s high for Wednesday was $78.15, while its low was $77.15, a nadir since February. Both the US crude benchmark and Brent are already about 4% lower from just three days of June trading, adding to the 6% drop experienced in May.
Oil extended its declines this week on worries that the global oil-producing alliance OPEC+ will not provide adequate support with its output cuts to offset weak summer demand for fuels. OPEC, the global oil-producing alliance, affirmed on Sunday that it will carry out output cuts through 2025, extending commitments initially set until the end of summer. OPEC+, which groups the 13-member Saudi-led Organisation of the Petroleum Exporting Countries with 10 other oil-producing nations steered by Russia, will attempt to cut 2.2 million barrels per day from its joint production. The problem for oil bulls, though, is nagging market fear that the reductions will not be enough to compensate for potentially weaker-than-usual demand for fuels this summer, especially with rising crude output from non-OPEC+ producers led by the United States. To add to market consternation, OPEC+ suggested that if demand improved by year-end, the alliance would add more than 500,000 barrels per day to the market by December and 1.8 million by June 2025. Meanwhile, US oil supplies are increasing, adding to the weight on crude prices. In Wednesday’s inventory data, the Energy Information Administration said US crude balances rose by 1.233 million barrels during the week ended May 31 after a prior weekly drop of 4.156 million barrels. Energy analysts on Wall Street had anticipated a drop of 2.1 million barrels instead. Gasoline stockpiles rose by 2.102 million, adding to the prior weekly build of 2.022 million, while distillates showed a 3.197 million barrel gain after the previous rise of 2.544 million.