On Tuesday, oil prices declined after the American Petroleum Institute (API) reported an unexpected increase in crude inventories.
The US West Texas Intermediate (WTI) July crude futures declined 1.31% to $73.25 per barrel on June 04. However, market analysts predict a 0.30% recovery to $73.47 a barrel in the coming trading day.
Likewise, Brent oil futures for July delivery shed 1.07% to $77.52 a barrel, extending the losing streak to five days. Nevertheless, the market anticipates a 0.92% rebound to $77.70 in the following session.
America’s petroleum benchmark has erased nearly all its gains this year, standing only 2.23% higher year-to-date. Downward pressure came from a recent OPEC+ announcement about gradually ramping up production beginning in October.
According to the bloc, it will phase out 2.20 million barrels per day (bpd) in output cuts over 12 months, ending in September 2025. After the wind-down period, total OPEC+ petroleum yield reductions will ease from 5.86 million bpd to 3.66 million bpd.
In addition, the US ISM Manufacturing Purchasing Managers Index plummeted to 48.70 points in May from 49.20 in April. The reading reversed a projected improvement to 49.80 points and indicated two months of contraction.
Traders expressed concern that slumping activity levels in the US factory sector will lead to a steep domestic crude oil demand softening.
API Accumulation Marks Softening Oil Demand
API oil inventories added 4.05 million barrels in the week ending May 31 after a 6.49-million-barrel draw the week before. The reading defied the market consensus of a crude shortfall of 1.90 million barrels.
Industry watchers noted that gasoline consumption during the Memorial Day weekend fell by 1.40% compared to a year ago. Furthermore, the experts added that higher-than-average winter temperatures sharply reduced energy demand for nearly all fuels across all sectors.
Lastly, commodity specialists expect the Energy Information Administration to announce a 2.10-million-barrel shedding in crude oil inventories. This would deepen the draw of 4.16 million barrels recorded in the week ending May 24.
