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Oil Prices Struggle for Direction ahead of Supply Data

Oil futures traded near unchanged Wednesday after an industry group reported a rise in U.S. crude inventories ahead of official data and investors awaited a meeting of OPEC and its allies on production curbs.

West Texas Intermediate crude for May delivery rose 3 cents, or less than 0.1%, to $60.58 a barrel on the New York Mercantile Exchange. June Brent crude the most actively traded contract, was flat at $64.17 a barrel on ICE Futures Europe.

News reports said OPEC and its allies, a group known as OPEC+, lowered their forecast for 2021 oil-demand growth by 300,000 barrels ahead of a Thursday meeting by energy ministers that will decide what to do with existing output curbs.

“Given this pessimistic outlook, it seems likely that the production quotas will be left in place for another month,” said Eugen Weinberg, analyst at Commerzbank, in a note.

“Originally the group had wanted to gradually ramp production, which had been reduced by up to 1.2 million barrels per day, back up again during the course of the year. However, this is unlikely to happen (for now), especially as OPEC+ is still determined by midyear to completely eradicate the global stock surpluses that had built up due to overproduction during the pandemic,” Weinberg wrote.

The American Petroleum Institute reported late Tuesday that U.S. crude supplies rose by 3.9 million barrels for the week ended March 26, according to sources. The data also reportedly showed gasoline stockpiles down by 6 million barrels, while distillate inventories rose by 2.6 million barrels. Crude stocks at the Cushing, Okla., storage hub, meanwhile, were up 904,000 barrels for the week, sources said.

More closely followed inventory data from the Energy Information Administration is due later Wednesday. The EIA is expected to show crude inventories up by 600,000 barrels, according to IHS Markit. It also forecast inventory gains of 400,000 barrels for gasoline and 300,000 barrels for distillates. 

Source: Marketwatch

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