Oil Prices Drop on US Inventory Build and Cautious OPEC+ Expectations
Oil prices decreased in Asian trade on May 4 due to rising inventories in the US and cautious supply expectations before an OPEC+ meeting.
Brent crude fell 0.69 percent to $82.59 a barrel, while US WTI crude dropped 0.68 percent to $77.85 a barrel.
The declines came after both benchmarks showed marginal losses in the previous session.
US crude stocks increased by 509,000 barrels, according to industry data.
The American Petroleum Institute (API) reported an unexpected increase in both crude oil and fuel inventories in the US.
This news was moderately bearish for the oil market, as analysts had expected a decrease in crude oil inventories.
Weaker-than-expected gasoline demand and the resulting stock build have contributed to a decrease in the prompt RBOB gasoline crack.
Official US government data on stockpiles is expected later today, with analysts anticipating a decrease in crude oil inventories of about 1.1 million barrels.
Cautious expectations regarding supply cuts from OPEC+ ahead of their June 1 policy meeting have also weighed on the market.
The text suggests that members of an organization are expected to continue cutting their voluntary oil supply beyond the second quarter of the year.
The potential ceasefire in Gaza has also contributed to a decrease in oil prices as the risk premium has unwound.
Economist Bill Weatherburn from Capital Economics believes OPEC+ production cuts will continue to support oil prices, but members may gradually unwind these cuts starting in July, leading to lower prices.
The US is optimistic about closing the gaps in negotiations for a Gaza ceasefire.
CIA Director Bill Burns is set to visit Israel on Wednesday for discussions with Prime Minister Benjamin Netanyahu and other Israeli officials.
Despite expectations of economic downturns being exaggerated, commodity prices have remained stable due to strong demand.
Sparta Commodities analyst Neil Crosby believes Asian demand may increase once production turnarounds decrease.