Oil nears three-month low as US report points to rising inventories

(Bloomberg) — Oil extended losses after an industry report pointed to a rise in U.S. crude inventories, adding to bearish signs for the market.

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Brent traded around $82 a barrel, near a three-month low, while West Texas Intermediate also dipped below $78. The American Petroleum Institute reported that crude inventories rose by 2.5 million barrels last week, according to people familiar with the matter. Meanwhile, Genscape data shows stocks rising in the Amsterdam-Rotterdam-Antwerp region, Europe’s oil trading hub.

The reports come ahead of next month’s OPEC+ meeting, where the group will decide whether to extend existing supply curbs. With oil futures falling, it has to contend with Brent’s prompt spread approaching a bearish contango structure – a sign of increased supply relative to demand.

“The view on the fundamental outlook remains bleak,” said Tamas Varga, an analyst at brokerage PVM. “It is manifested by the weakening of the downgrade in crude oil, where the frontal spread on the European benchmark yesterday settled at 18 cents a barrel.”

Global benchmark Brent is about 7% higher so far this year, supported by OPEC+ supply cuts, although prices have cooled since mid-April. The group is expected to extend the output cap at the June 1 meeting. Meanwhile, geopolitical risks continue, with recent drone strikes on Russian refineries and an oil tanker hit by a missile in the Red Sea area.

If the API stockpiling is confirmed by EIA data later Wednesday, it would be the first reported gain this month. Analysts, however, forecast a decline. Other metrics showing weakness include Brent DFL – a measure of dated Brent against futures – which turned negative, and money managers recently cut their bullish bets on Brent, although they were raised on WTI.

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