Oil Market Dips on Rising US Stockpiles, Ceasefire Hopes

By Adedapo Adesanya

The oil market depreciated on Tuesday on the back of rising crude inventories and production in the US, the world’s biggest oil consumer, along with increasing hopes of a ceasefire agreement in the Middle East.

The price of Brent crude fell by 47 cents or 0.5 per cent during the session to settle at $85.86 per barrel and the US West Texas Intermediate (WTI) crude declined by 53 cents or 0.6 per cent to $81.40 per barrel.

According to American Petroleum Institute (API) figures on Tuesday, US crude oil inventories swelled last week by 4.906 million barrels, while gasoline and distillate stockpiles fell.

Gasoline (petrol) inventories fell by 1.483 million barrels, and distillates fell by 2.187 million barrels.

Official data from the US Energy Information Administration (EIA) is due later on Wednesday.

Also, the EIA said US crude supply is also showing signs of ramping up, with production rising to 13.15 million barrels per day in February from 12.58 million barrels per day in January in its biggest monthly increase in over 3 years.

Expectations that a ceasefire agreement between Israel and Hamas could be in sight, following a renewed push led by Egypt to revive stalled negotiations between the two, pushed oil prices lower.

An end to the war would reduce concerns of broadening the conflict that could disrupt supply from the Middle East.

However, the market found support as supply from the Organisation of the Petroleum Exporting Countries (OPEC) fell by 100,000 barrels per day in April to 26.49 million barrels per day, a Reuters survey found on Tuesday.

This reflected lower exports from Iran, Iraq and Nigeria against a backdrop of ongoing voluntary supply cuts by some members agreed with the wider OPEC+ alliance.

Several members of OPEC+, which includes OPEC, Russia and other allies, made new cuts in January to counter economic weakness and increase supply outside the group. Producers agreed in March to keep the cuts in place until the end of June.

OPEC+ is scheduled to meet on June 1 to decide its next output policy steps.