Oil inches higher as traders return to buying mode

Tokyo — Oil prices edged up on Thursday, after two consecutive sessions of decline, as investors reassessed the latest data on US crude oil and petrol inventories and returned to buying mode.

Brent crude futures for May were up 31c, or 0.4%, at $86.40 a barrel while the more actively traded June contract rose 32c, or 0.4%, to $85.73 at 4.15am GMT. The May contract expires on Thursday.

US West Texas Intermediate (WTI) crude futures for May delivery were up 39c, or 0.50%, to $81.74 a barrel.

Both benchmarks were on track to finish higher for a third consecutive month, and were up about 4.5% from February.

In the prior session, oil prices were pressured following last week’s unexpected rise in US crude oil and petrol inventories, driven by a rise in crude imports and sluggish petrol demand, according to Energy Information Administration data.

However, the crude stock increase was smaller than the build projected by the American Petroleum Institute.

“We ... expect US inventories to rise less than normal in reflection of a global oil market in a slight deficit,” Bjarne Schieldrop, chief commodities analyst at SEB Research, said in a note.

“This will likely hand support to the Brent crude oil price going forward.”

Also providing support to prices were US refinery utilisation rates, which rose 0.9 percentage points last week.

Recent disappointing inflation data affirms the case for the US Federal Reserve to hold off on cutting its short-term interest rate target, a Fed governor said on Wednesday, but he did not rule out trimming rates later in the year.

“The market is converging on a June start to cuts for both the Fed and the European Central Bank,” JPMorgan analysts said in a note. Lower interest rates support oil demand.

Investors will watch for cues from a meeting next week of the joint monitoring ministerial committee of oil cartel Opec amid supply concerns over geopolitical risks.

Opec+ is unlikely to make any oil output policy changes until a full ministerial gathering in June, but any sign of members not sticking to current production quotas will be viewed as bearish, analysts at ANZ Research said.

“The lack of a ceasefire deal between Israel and Hamas continues to keep tension in the Middle East elevated,” ANZ said.

Reuters