Oil prices experienced a decline following a two-day increase, as concerns over higher US inventories offset expectations of supply cuts by OPEC+.
The global benchmark Brent crude edged lower towards $83 a barrel, retracing some gains made during the first two sessions of the week amid strength in physical markets. West Texas Intermediate (WTI) hovered below $79. The American Petroleum Institute (API) reported a significant increase of over 8 million barrels in nationwide crude holdings, including stocks at the Cushing, Oklahoma, storage hub.
Market participants awaited official data on US inventories later in the week, with expectations of a potential fifth consecutive week of gains in the largest oil consumer.
Despite the recent decline, crude prices continued to show resilience, moving towards a second consecutive monthly gain. This uptrend has been supported by supply cuts implemented by OPEC and its allies. Market analysts widely anticipate that the group will agree to extend these production reductions into the second quarter to stabilize the market. Additionally, geopolitical tensions in the Middle East have provided some support to oil prices.
Several indicators suggest a tightening of the crude market. Near-term timespreads have widened in a bullish, backwardated pattern, indicating that prompt barrels are commanding higher prices than longer-dated ones. Moreover, other physical metrics have also shown signs of strengthening.
Russell Hardy, chief of the Vitol Group, remarked at the International Energy Week in London that crude markets appear fairly stable, with prices hovering around $80 a barrel. He noted that oil markets are now less susceptible to volatility compared to previous years, as they have adapted to absorb the impact of sanctions regimes into the system.
