Oil futures: Crude surrenders gains, US stock build offsets China boost
Quantum Commodity Intelligence – Crude oil Wednesday futures were little changed after surrendering earlier gains as EIA data revealed a sharp build in US oil stocks, offsetting China's stimulus boost and fresh oil quotas, along with US figures showing cooling inflation.
Aug23 ICE Brent futures were trading at $74.28/b (1700 GMT), compared to the day's range of $73.53-$75.49/b and Tuesday's settle of $74.29/b.
At the same time Jul23 NYMEX WTI was trading $69.40/b, versus Tuesday's close of $69.42/b.
Data from the Energy Information Administration showed US commercial crude oil stocks increased nearly 8 million barrels in the week to 9 June, while both gasoline and distillates also posted builds.
Oil prices also dipped after a Wall Street Journal report published Wednesday saying US Biden administration has 'quietly' embarked on talks with Iran in a bid to cool tensions.
Markets had been positive for most of the session, after China's central bank on Tuesday injected 2 billion yuan (US$280 million) into the system by lowering the seven-day reverse repo rate, although there were some concerns the rate cuts are too little too late.
Prices also received a lift as Chinese refiners were issued with a third batch of crude oil import quotas, taking the total issued to refiners so far in 2023 to 194 million mt.
Inflation
Meanwhile, slowing US inflation has increased the odds of a pause in rate hikes when the Federal Reserve meets later Wednesday, according to futures contracts.
"Oil extended its rally after the latest inflation report sealed the deal for the Fed to skip a rate hike at this week's meeting. The disinflation process remains intact and that could mean the dollar's days are numbered, which would provide some support for oil prices," said Ed Moya, senior market analyst at brokerage Oanda.
The US inflation rate cooled in May to its lowest annual rate in more than two years, as the CPI increased by just 0.1% on the month and 4% from a year ago.
Markets earlier shrugged off American Petroleum Institute data released late Tuesday which showed across-the-barrel builds, including a fall in US commercial crude inventories of 1.024 million barrels last week.
Gasoline stocks also gained by 2.075 million barrels and distillate stocks posted a 1.45 million barrel increase.
Oil markets also brushed off a report from the IEA that future oil demand growth will slow rapidly in the next few years and peak altogether for combustible fossil fuels by 2028.
