WTI crude fell on Tuesday, reversing the previous session’s gain as fresh signs of global oversupply overtook a brief price recovery. Rising inventories at Cushing and a weaker demand forecast pushed the near-term outlook lower, even as OPEC+ policy offers intermittent support.
West Texas Intermediate crude oil futures retreated on Tuesday, giving back the previous session’s gains as renewed worries over global oversupply weighed on sentiment. WTI for January delivery fell 1.8% to settle at $71.24 per barrel on the New York Mercantile Exchange, erasing much of Monday’s advance.
Inventory build points to ample supply
The pullback followed industry data showing rising inventories at the Cushing, Oklahoma storage hub, the key delivery point for WTI futures. Traders read the build as a signal that supply is outpacing demand in the near term.
The demand side offered little relief. The International Energy Agency revised its global demand growth forecast downward earlier this month, pointing to weaker economic activity in China and Europe. The agency now expects demand to grow by just 900,000 barrels per day in 2024, well below historical averages.
OPEC+ discipline under scrutiny
OPEC and its allies, including Russia, have maintained production cuts totaling roughly 2.2 million barrels per day since early 2023. But compliance has been uneven, and some members have exceeded their quotas. Iraq and Kazakhstan have been among the countries producing above agreed levels, undermining the group’s effort to support prices.
The group is scheduled to meet on June 1 to set production policy for the second half of the year. Analysts expect it to extend existing cuts, yet any decision will be watched for signs of discord, and a failure to reach consensus could trigger a further sell-off.
Where prices go next
The move filtered into related markets. Energy sector stocks have lagged the broader market this year, with the S&P 500 energy index down roughly 4% year-to-date. Some analysts see attractive valuations there but caution that downside risk remains if oversupply persists.
For now, the balance of supply and demand still points toward ample crude. Traders next turn to weekly U.S. inventory data due Wednesday from the Energy Information Administration for confirmation of the Cushing build.
Source: Bitcoin World
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