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Oil Takes Double Blow as OPEC+ to Loosen Taps, Stockpiles Expand By Bloomberg

© Bloomberg. Oil storage silos stand at the oil and gas refinery operated by Naftna Industrija Srbije AD (NIS), a unit of Gazprom Neft PJSC, in this aerial photograph in Pancevo, Serbia, on Tuesday, April 28, 2020. Crude whipsawed near $11 a barrel after a major index tracked by billions of dollars in funds bailed out of near-term contracts for fear prices may turn negative again. Photographer: Oliver Bunic/Bloomberg

(Bloomberg) — Oil extended its retreat after taking a double blow, with the OPEC+ alliance said to be poised to agree a production increase on Thursday just as U.S. stockpiles were seen expanding by the most this year.

West Texas Intermediate declined for a fourth straight day in early Asian trading, after closed on Tuesday at the lowest level since mid-February. The widespread view among the producer group is that the global market can absorb additional barrels, according to people familiar with the matter.

While oil’s powerful rally is facing a setback as investors and traders adjust to prospects for increased production, WTI remains 22% higher this year. Prices have been supported by the OPEC+ cuts and the vaccine-aided global recovery. However, the producer alliance could return the bulk of the 1.5 million barrel-a-day output hike that’s up for debate this week.

In the U.S., domestic crude inventories rose by more than 7 million barrels last week, the American Petroleum Institute reported, according to people familiar. If confirmed by the official tally, that would be the largest weekly build since December. Still, the API figures also showed large drops in gasoline and distillate stockpiles.

Oil bulls may draw comfort from further signs that the pandemic is receding. The daily count of Covid-19 cases in the U.S. fell to 48,092 on Monday, the lowest number in more than four months. President Joe Biden said he hopes the country would be back to normal “by this time next year.”

©2021 Bloomberg L.P.

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