Oil erased losses as traders awaited inflation data, after an increase in U.S. fuel stockpiles brought crude’s rally to a halt.
Futures in New York held steady after earlier dropping one per cent. In the U.S., inflation figures due later Thursday may give clues about the path of monetary policy. Data on Wednesday showed gasoline inventories jumped, and a rolling average of demand slid for the first time in a month, adding to the bearish sentiment.
Despite the weekly demand data, the oil market remains on a steady path of recovering consumption – though strength in the western world is partly offset by weakness in some Asian countries. Traders are also monitoring international talks to revive the Iranian nuclear deal, which are yet to find a solution. All the while, OPEC+ is gradually adding supply back to the market.
“Many seem to think the U.S. inventory report on the large oil-product inventory increase is a one-off event, considering that other indicators point to improving demand,” said Giovannni Staunovo, a commodity analyst at UBS Group AG. “So considering the positive momentum, some likely see this as a buying opportunity.”
- West Texas Intermediate for July delivery was little changed at $69.97 a barrel at 10:01 a.m. London time
- WTI slipped below $70 on Wednesday, after rising to the highest since 2018 earlier this week
- Brent for August settlement edged up 0.1 per cent to $72.29
The market has continued to firm in a bullish structure. The prompt timespread for Brent reached its strongest level since late April on Thursday, rising above 50 cents a barrel. That structure indicates tight supply in the Atlantic Basin region.
U.S. gasoline inventories rose by more than seven million barrels for a second weekly gain, according to the Energy Information Administration. Weekly gasoline supplied, which the U.S. government uses as a proxy for demand, posted its biggest decline since February when the country was hit by an unprecedented polar blast.
© 2021 Bloomberg L.P.