Oil Ekes Out Minimal Gains Amid Gloomy Market News

Meanwhile, Russia's seaborne exports rise to record levels: File Image/Pixabay

Oil eked out minimal gains on Tuesday, thanks to traders taking note of Washington’s plan to replenish its Strategic Petroleum Reserve as well as the Energy Information Administration anticipating higher seasonal demand and lower than expected output.

Brent settled up 43 cents at $77.44 per barrel, while West Texas Intermediate settled up 55 cents at $73.71.

The EIA said in its Short-Term Energy Outlook, "We expect the seasonal rise in oil consumption and a drop in OPEC crude oil production to put some upward pressure on crude oil prices in the coming months."

The Agency also predicted that U.S. crude production will rise 5.1 percent to 12.53 million barrels per day (bpd) this year; however, lowered its output estimate for this year and 2024 and cut its estimate for Brent and WTI prices by more than 7 percent to $78.65 and $73.62 per barrel respectively.

But it’s unclear why traders took such such a middling report to heart, especially considering Tuesday also saw news that China’s imports shrank in April, with the total dropping 7.9 percent to $205.2 billion compared to the same time last year, according  to the General Administration of Customs.

Also, a survey by the national statistics bureau and the Chinese Federation for Logistics & Purchasing reported Chinese manufacturers saying new orders and export orders declined in April from the previous month; trade with the U.S. and Europe also contracted.

Other news that presumably capped gains included American Petroleum Institute figures on Tuesday showing that U.S. crude oil inventories rose by about 3.6 million barrels in the week ended May 5, compared with expectations for a 917,000 barrel drawdown.

That’s not all: while usually guaranteed to cause consternation in trading circles, investors seemingly downplayed John Williams, president of the New York Fed, who complained that inflation is still too high and warned that the central bank could raise rates again.

He said, "We haven't said we are done raising rates," and he added that "if additional policy firming is appropriate, we'll do that."

Finally on Tuesday came the disclosure from Bloomberg that four-week average seaborne shipments of crude from Russia rose in the period to May 5 to the highest since the news agency began tracking them in detail at the start of 2022.

Bloomberg stated, “Moscow’s assertion that high exports by sea were offset by an unreported drop in piped flows to Europe doesn’t appear to stand up to scrutiny.”