Oil Holds Near 4-Month Low as US Stockpiles Amplify Bearish View

(Bloomberg) -- Oil hovered near a four-month low as higher US inventories added to bearish sentiment, compounded by OPEC+’s plan to boost supply.

West Texas Intermediate remained little changed below $74 per barrel after the US Energy Information Administration reported that US crude stockpiles expanded by 1.23 million barrels. WTI has posted five straight days of losses, sitting in oversold territory after Sunday’s OPEC+ meeting.

“It’s pretty surprising that crude is holding up given the size of the build,” said Matt Sallee of Tortoise Capital Advisors LLC. “But crude prices have already dropped quite a bit in the last several days, so that’s providing a little bit of a floor.”

Oil has tumbled around 5% this week following a decision by OPEC+ on Sunday to start unwinding supply cuts in the fourth quarter, despite concerns about demand and higher output from outside of the group. Traders who rely on trend-following algorithms compounded the selloff. 

While the Organization of the Petroleum Exporting Countries and its allies may have spooked the market with their decision, RBC Capital Markets LLC predicts the Saudi-led group will “hit the kill switch” on returning supply if weakness persists. Most analysts had expected OPEC+ to extend curbs through year-end.

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