Oil fell below $70 as the physical crude market indicated that supplies are more than adequate to meet tepid demand.
The June-July cash roll for West Texas Intermediate, which reflects crude supply balances in Cushing, Oklahoma, fell to a discount of 30 cents a barrel, indicating lower demand for barrels to be delivered to June than in July. Inventories for delivery of benchmark U.S. crude futures rose 1.05 million barrels in the week ended May 26, traders said, citing data from Wood Mackenzie.
The futures market also reflected ample short-term supply as the first-month WTI spread deepened into contango, with shorter-dated contracts trading at a discount to longer-dated ones.
Crude oil prices have fallen about 13% this year amid China’s poor recovery from its Covid Zero policy and concerns about aggressive monetary tightening in the US. All eyes will be on the next meeting of the OPEC+ coalition on June 4. Last week, Russia said OPEC+ was unlikely to take further action at its meeting, undercutting Saudi Arabia’s warning to oil short sellers to “watch out”.
Prices:
- West Texas Intermediate for July fell $3.21 from Friday’s close to settle at $69.46 a barrel in New York.
- There was no settlement on Monday due to the US holiday and trading will be reserved on Tuesday.
- Brent for July settlement was down $3.53 at $73.54 a barrel.
Although Russia had previously pledged to cut production, its crude flows to international markets show no substantial sign of the scourge. Meanwhile, the country aims to increase its daily diesel exports from major western ports by almost a third in June as some refineries resume full operations after seasonal maintenance.
-With the assistance of Lucia Kassai, Devika Krishna Kumar and Sri Taylor.
