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Oil slightly lower on signs of easing supply tightness

oil prices

Brent crude futures settled 17 cents lower at $83.16 a barrel, and U.S. WTI crude futures ended 10 cents lower at $78.38

Oil prices closed marginally lower on Tuesday on signs of easing supply concerns, while market participants shifted their focus to U.S. stockpiles data due later today and Wednesday.

Brent crude futures settled 17 cents lower at $83.16 a barrel, and U.S. WTI crude futures ended 10 cents lower at $78.38.

Prices dropped further in thin post-settlement trading after market sources said that data from the American Petroleum Institute (API) showed a rise in U.S. crude and fuel stocks last week. Rising inventories, typically a sign of weak demand, have defied analysts’ expectations in recent weeks.

Brent crude futures traded at $82.98 a barrel by 8:48 pm GMT, 35 cents lower than Monday’s closing price, and WTI futures were down 23 cents to $78.26 a barrel. U.S. gasoline futures and ultra-low sulfur diesel futures also dropped in extended trading.

If EIA shows less barrels are going into the refineries, then that is a problem for crude oil here, according to Mizuho analyst Robert Yawger. Heading into peak summer driving season we should be drawing, not building, he said.

Current global inventory data shows crude oil and petroleum supplies are running 1.1 million bpd above forecasts in developed economies, as per an analysis by energy brokerage StoneX.

Global inventories remain in a building phase and has accelerated recently, StoneX analyst Alex Hodes wrote to clients on Tuesday.

The Energy Information Administration (EIA) on Tuesday raised its forecasts for this year’s world oil and liquid fuels output and lowered its demand expectations, pointing to a well-supplied market as opposed to prior forecasts that showed under-supply.

The premium of the first-month Brent contract to the six-month contract slid to $2.90 a barrel on Tuesday, the lowest since mid-February, another sign of market participants betting on easing supply tightness.

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