Oil holds near four-month low on signs of rising U.S. inventories

(Bloomberg) — Oil kept losses near a four-month low as an industry report highlighted a rise in U.S. crude inventories, reinforcing bearish sentiment worsened by the OPEC+ plan aimed at increasing supply.

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The American Petroleum Institute reported that U.S. inventories rose by 4.1 million barrels last week, according to people familiar with the data. Brent crude was trading above $77 a barrel after closing lower for a fifth session on Tuesday, while West Texas Intermediate was near $73.

API also reported an increase in crude inventories at the Cushing, Oklahoma, storage center, where the U.S. benchmark price is set. National stocks of gasoline and distillates have also increased significantly.

Oil fell about 5% this week following OPEC+'s decision on Sunday to begin ending supply cuts in the fourth quarter, despite concerns about demand and rising production outside the band. Traders who rely on trend-following algorithms have made the selling worse.

While the Organization of the Petroleum Exporting Countries and its allies have spooked the market with their move, RBC Capital Markets LLC predicts the group will “pull the circuit breaker” to restore supply if weakness persists. Most analysts expected OPEC+ to extend restrictions until the end of the year.

Increased supply from OPEC+ during a period of slowing economic activity and easing geopolitical tensions will likely push oil prices lower, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova Pte in Singapore.

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