Oil futures: Crude rallies 3% despite US stock build
Quantum Commodity Intelligence – Crude oil futures rallied over 3% on Thursday as the trade shook off a build in US commercial inventories and built on momentum from the passage of US legislature to halt a government shutdown.
Aug23 ICE Brent futures were trading at $74.82/b (1645 BST), compared to Wednesday's settle of $72.60/b.
At the same time, Jul23 NYMEX WTI was trading $70.62/b versus Wednesday's close of $68.09/b.
The Republican-controlled House voted by a margin of 314-117 to send the legislation to the Senate, which is expected to be a formality, although the Republican vote against the deal was higher than expected.
The rally came even as delayed EIA data showed a big jump in US commercial crude stocks, which were up 4.5 million barrels over the week to 26 May at 459.7 million barrels.
However, broader negative sentiment remained in place after weak PMI data from China, a downbeat report from the ECB and wider concerns over the US economy.
Attention also turned to this weekend's OPEC+ meeting in Vienna, which comes as the Middle East Dubai benchmark registered its lowest monthly average since December 2021.
In addition, market structure has narrowed sharply, while Saudi Arabia is expected to implement steep cuts to OSPs for July-loading crude.
The lower outright prices may lead to calls for further production cuts, but market consensus for now is that the producer group will focus on compliance levels around previously announced cuts.
"We expect the nine major OPEC+ producers which announced voluntary production cuts in April to keep production unchanged, but utilize some partly offsetting hawkish rhetoric. One possibility is to officialize these voluntary cuts, and broaden the cuts to smaller producers," said Goldman Sachs in its OPEC+ preview.
The OPEC+ meeting also comes with the added drama of the OPEC Secretariat barring a number of media outlets from attending some briefings.
Meanwhile, oil prices also wobbled after delayed American Petroleum Institute data released late Wednesday revealed a rise in US commercial crude inventories of 5.2 million barrels last week.
Gasoline stocks gained by 1.9 million barrels and distillate stocks posted a 1.85 million barrel increase.
Sentiment in Europe was also negative after the European Central Bank said in its May Financial Stability Review euro area's stability outlook remained fragile, following turmoil in the banking sector, which comes after weak PMI data from China.
