Oil futures edged lower Wednesday as investors assess the demand outlook and prospects for a return of Iranian supply while awaiting official weekly U.S. data on inventories.
West Texas Intermediate crude for July delivery fell 36 cents, or 0.5%, to $65.71 a barrel on the New York Mercantile Exchange. August Brent crude, the global benchmark, was down 32 cents, or 0.5%, at $68.17 a barrel on ICE Futures Europe. Front-month July Brent was down 30 cents, or 0.4%, at $68.35 a barrel.
“The potential for a return of Iranian oil supply into the market has been keeping oil prices from gaining further,” said Warren Patterson, head of commodities strategy at ING, in a note.
“On the positive side, physical demand has been improving in both Europe and the U.S. as a slowdown in new COVID cases has been pushing up mobility,” he wrote. “The start of the summer driving season in the U.S. from next week onwards could further support crude oil demand in the country.”
India, the world’s third-largest oil consumer, has also seen a slowdown in the rate of new coronavirus cases in recent weeks, which could lead to an easing of mobility restrictions next month, Patterson said.
Meanwhile, the American Petroleum Institute reported late Tuesday that U.S. crude supplies edged down by 439,000 barrels for the week ended May 21, according to sources. The data also reportedly showed gasoline stockpiles down by nearly 2 million barrels, while distillate inventories dropped by 5.1 million barrels.
Crude stocks in Cushing, Oklahoma, the delivery hub for Nymex futures, fell by nearly 1.2 million barrels for the week, sources said.
More closely followed inventory data from the Energy Information Administration will be released Wednesday morning. On average, the EIA is expected to show crude inventories down by 2.2 million barrels, according to a survey of analysts conducted by S&P Global Platts. It also forecast supply declines of 700,000 barrels for gasoline and 1.6 million barrels for distillates.