(Bloomberg) — Oil advanced after an industry report showed shrinking US stockpiles, and traders looked ahead to a report from the International Energy Agency that may shed light on market balances into the second half.
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Brent rose toward $83 after a 1.2% drop on Tuesday as persistent US inflation dimmed the demand outlook. West Texas Intermediate traded above $78. The American Petroleum Institute reported nationwide crude inventories fell 3.1 million barrels last week, with a drawdown also seen at the closely watched hub at Cushing, Oklahoma, according to people familiar with the data.
The outlook from the Paris-based IEA is due later Wednesday, and follows a monthly assessment from the Organization of the Petroleum Exporting Countries. The cartel’s analysis showed OPEC+ nations participating in the group’s most recent round of output cuts exceeded their quotas last month.
Oil has gained ground this year as OPEC+ curtailed output to prevent a glut and shore up global prices. In the run-up to deciding whether to extend the curbs at a June 1 meeting, members are grappling with the thorny issue of how much crude they are capable of pumping, with several major exporting nations seeking to have their recognized capacity levels increased.
“A loosening of OPEC+ curbs within the year is not yet a given” due to Saudi Arabia’s incentive for higher prices in order to balance its budget, said Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank Ltd. in Singapore. That could imply “fraught and tense OPEC+ dynamics” as other members seek to increase production, he said.
Also due later Wednesday will be data on US consumer prices, after a producer gauge of inflation remained stubbornly high. Federal Reserve Chair Jerome Powell said the central bank must be patient and wait for evidence that price pressures were abating, doubling down on the need to keep borrowing costs higher for longer.
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