Brent extends losses on US crude stocks build estimates

The front-month ICE Brent contract moved $1.47/bbl lower on the day, to trade at $82.03/bbl at 09.00 GMT.

PHOTO: Oil pumpjacks. Getty Images

Upward pressure:

Brent futures remained supported amid reports that Israel has rejected Hamas’ latest truce proposal and launched another round of ground and air attack on Gaza’s southern Rafah region.

This news has renewed supply disruption fears in the global oil market, analysts said. “The lingering geopolitical flash point and headline risk could keep a bid under oil prices into the weekend,” SPI Asset Management’s managing partner Stephen Innes said.

There is increasing speculation that OPEC would consider extending its existing production cuts into the third and fourth quarters of this year. The oil producers’ group is scheduled to convene on 1 June to discuss supply cut policies.

“The market anticipates a high probability of [OPEC+] oil producers extending some output curbs,” Innes added.

Downward pressure:

A build in US crude stocks contributed to the downward pull in Brent futures. US commercial crude inventories gained 509,000 bbls in the week ended 3 May, according to the American Petroleum Institute (API) estimates.

“[Brent] crude oil traded lower after the API reported across-the-board increases in US crude and fuel stockpiles,” Saxo Bank’s strategy team wrote in a note.

Concerns about a slowdown in the US economy have heightened, after the country released poor manufacturing index reading and jobs data. These datasets have supported the narrative of subdued demand in one of the largest oil consuming nations, adding more downward pressure on Brent's price.

The global oil market’s concerns about “weaker-than-expected economic growth in the US have intensified,” Innes added.

By Aparupa Mazumder

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