Oil Advances With US Growth Outlook: Stockpile Levels in Focus

Oil prices increased, erasing previous losses, as a projected increase in US oil stocks was overshadowed by anticipation that OPEC+ will continue production restrictions. West Texas Intermediate rose about 1% to trade above $79 per barrel after previous gains this week fueled by indications of resilience in physical markets. The American Petroleum Institute, which is backed by the industry, stated that countrywide oil stocks increased by 8.4 million barrels last week, including a 1.8 million barrel accumulation at the Cushing storage hub in Oklahoma. Official official numbers for US inventories are coming later Wednesday. Widely followed indicators of the physical market indicate tighter circumstances.

Near-term time spreads have widened in a bullish, backward trend, with near-term barrels pricing higher than longer-dated ones. Physical market swaps and the WTI cash roll have also gained strength. The roll, which represents supply and demand balances at Cushing, Oklahoma, the delivery point for US futures, has reached its highest level in almost a year.

Oil prices are on track for a slight monthly rise, but they remain in a relatively narrow band. The gain has been aided by OPEC and its partners’ production cutbacks, with the cartel likely to agree to extend cuts into the second quarter. Tensions in the Middle East have also contributed to price increases. Nonetheless, questions about the demand forecast persist. According to a report issued Wednesday by China National Petroleum Corp, China’s crude consumption is predicted to rise by only 1% this year as the post-pandemic rebound fades and the adoption of alternative energy vehicles saps demand.