Oil holds drop after industry report shows rising US stockpiles

Oil steadied after a decline as a report showed US inventories are continuing to expand, a sign supply may be running ahead of demand.

Brent crude traded near $82 a barrel after dropping by 0.9% on Tuesday, while West Texas Intermediate was above $78. The industry-funded American Petroleum Institute said US nationwide stockpiles rose by 400,000 barrels last week, according to people familiar with the data. That would be the sixth week of gains if confirmed by official figures due Wednesday.

Global benchmark Brent has risen by about 6% this year, supported by tensions in the Middle East, higher transport costs due to disruptions to shipping and OPEC+ cutbacks. Gains have been capped by a still-shaky demand outlook, particularly in China, and surging supply from non-OPEC producers including the US, Brazil and Guyana.

Saudi Arabia, meanwhile, unexpectedly increased prices of its main oil grade to buyers in Asia, after the Organization of the Petroleum Exporting Countries and allies agreed on Sunday to extend existing output cuts to the end of June.

China set a bullish target of around 5% growth for its economy this year, as top leaders tried to boost confidence in the world’s second-largest economy. But while Chinese Premier Li Qiang said support was needed on ‘all fronts,’ his annual report to the legislature didn’t offer much fiscal firepower.

Investors will also be monitoring Federal Reserve Chair Jerome Powell’s testimony before the House Financial Services Committee later on Wednesday for clues on the path of US monetary policy.