(Bloomberg) — Oil hovered near a four-month low as an industry estimate for higher US inventories added to bearish sentiment, compounded by OPEC+’s plan to boost supply.
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West Texas Intermediate was little changed near $74 a barrel ahead of the US Energy Information Administration’s weekly stockpile report. WTI has posted five straight days of losses, sitting in oversold territory after Sunday’s OPEC+ meeting.
Bearish supply forecasts are weighing on the market. The American Petroleum Institute on Tuesday reported US inventories expanded by 4.1 million barrels last week, according to people familiar with the data. Crude stockpiles probably increased at the storage hub at Cushing, Oklahoma, where the US benchmark is priced, according to API.
The API numbers show “clearly bearish stats,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “Rising inventories are an indication that demand may be weaker than assumed on paper.”
Official US weekly data on stockpiles are due later Wednesday, and may drag down prices if supply builds.
Oil has tumbled around 5% this week following a decision by OPEC+ on Sunday to start unwinding supply cuts in the fourth quarter, despite concerns about demand and higher output from outside of the group. Traders who rely on trend-following algorithms compounded the selloff.
While the Organization of the Petroleum Exporting Countries and its allies may have spooked the market with their decision, RBC Capital Markets LLC predicts the Saudi-led group will “hit the kill switch” on returning supply if weakness persists. Most analysts had expected OPEC+ to extend curbs through year-end.
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