Oil prices edged lower, retreating from a seven-week high, as growing US stockpiles tempered investor optimism amid rising equity prices. Brent crude dropped to nearly $85 a barrel after hitting its highest intraday price since May 1, while West Texas Intermediate remained above $81 a barrel.
The American Petroleum Institute reported that US crude inventories increased by 2.26 million barrels last week, according to sources familiar with the data. If confirmed by official figures, this would mark the third consecutive weekly increase. Stockpiles at the Cushing, Oklahoma hub also rose, the API noted.
The rise in inventories offset the positive sentiment generated by climbing stock prices. The S&P 500 reached another record on Tuesday, which has helped extend a strong recovery in oil prices, also driven by trend-following technical traders.
Oil prices had rebounded from earlier losses this month when OPEC+ suggested it might increase supply, clarifying that such a plan was conditional. Key timespreads have widened, indicating stronger near-term demand, while refiners in Asia are resuming capacity after maintenance, despite weak margins, boosting crude consumption.
“There are implicit signs that refiners are preparing for the summer season,” said Tamas Varga, an analyst at brokerage PVM. “Front-month Brent is more than $8 a barrel above the post-OPEC+ meeting trough, showing genuine optimism that the global oil balance will eventually tighten.”
However, the recent surge in oil prices has led to signs that futures are approaching overbought levels. Brent’s relative strength index on a nine-day basis has surpassed 70, suggesting a potential pullback.
Trading volumes in oil futures are expected to be lower on Wednesday due to a US holiday.
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