Oil prices end with gains, but off session highs, after rise in U.S. crude, gasoline inventories

By William Watts

International Energy Agency lowers forecasts for demand growth

Oil futures trimmed gains Wednesday, pulling back from session highs attributed to a cooler-than-expected May consumer-price index reading, after government data showed unexpected increases in U.S. crude and gasoline inventories.

Price moves

West Texas Intermediate crude CL00 for July delivery CL.1 CLN24 rose 60 cents, or 0.8%, to end at $78.50 a barrel on the New York Mercantile Exchange, after trading as high as $79.32.August Brent crude BRN00 BRNQ24, the global benchmark, rose 68 cents, or 0.8%, to settle at $82.60 a barrel on ICE Futures Europe.Back on Nymex, July gasoline RBN24 fell 0.6% to $2.394 a gallon, while July heating oil HON24 gained 0.8% to close at $2.441 a gallon.July natural gas NGN24 fell 2.7% to $3.045 per million British thermal units, after ending the previous session at a five-month high on forecasts for above-average temperatures across much of the U.S.

Market drivers

Oil held gains after the Federal Reserve's latest forecasts Wednesday afternoon signaled policymakers expect to deliver one rate cut in 2024.

Crude hit session highs in morning trade after a cooler-than-expected May consumer-price index was seen helping clear the way for rate cuts.

See: Consumer-price index points to slower U.S. inflation

Crude had been knocked off session highs in morning trade after the Energy Information Administration said U.S. crude-oil inventories rose 3.7 million barrels in the week ended June 7, while gasoline stocks were up 2.6 million barrels and distillates increased by 900,000 barrels.

The "good news' for bulls was that the report showed demand managed to rise back above the 9 million barrel a day threshold last week, said Robert Yawger, executive director for energy futures at Mizuho Securities, in a note.

"The bad news is that Gasoline storage was up 2.6 million barrels to a 13 week high 233.5 million, is 12.5 million barrels above last year, and has posted storage builds of at least 2.0 million barrels for three weeks in a row at the beginning of summer driving season when Gasoline is supposed to lead the energy patch to the promised land," he said.

Analysts surveyed by S&P Global Commodity Insights, on average, had expected U.S. crude inventories to show a fall of 900,000 barrels, with gasoline down 500,000 barrels and distillates up 400,000 barrels.

The American Petroleum Institute late Tuesday reported a 2.4 million barrel fall in U.S. crude inventories last week, according to a source citing the data, with gasoline stocks down 2.55 million barrels and distillates up 972,000 barrels.

The Paris-based International Energy Agency on Wednesday lowered its forecast for global oil-demand growth by around 100,000 barrels a day to 960,000 barrels a day in 2024, followed by "subpar" growth of 1 million barrels a day, or mbd, in 2025 "held back by a muted economy and accelerating clean energy technology deployment."

The revised forecasts widen the gap between the demand outlook from the IEA, whose members include many of the world's largest oil consumers, and the Organization of the Petroleum Exporting Countries, or OPEC.

OPEC, in its monthly report on Tuesday, left its outlook for 2024 and 2025 demand growth unchanged at 2.2 mbd and 1.8 mbd, respectively.

-William Watts

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06-12-24 1623ET

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