Morning Highlights: 🛢 Oil Slips on Surprise U.S. Crude Build and OPEC+ Output Uncertainty

Market Snapshot (as of 06:15 EST):

🔻 Brent: $65.78/b (−$0.85)

🔻 WTI: $62.83/b (−$0.84)

📉 Pullback after touching two-week highs yesterday

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📉 Today’s Market Themes:

• Surprise U.S. crude inventory build weighs on sentiment

• Refined product draws seen as a longer-term bullish signal

• OPEC+ production flat in April despite quota hikes

• U.S. Fed signals wait-and-see on inflation and tariffs

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📰 Key Drivers:

🔸 Surprise Crude Build from API Data

The American Petroleum Institute reported a 4.3 million barrel rise in U.S. crude inventories for the week ending May 9. Gasoline and distillate stocks fell by 1.4M and 3.7M barrels, respectively. The crude build overshadowed bullish product draws.

Giovanni Staunovo, UBS: “The crude build wasn’t helpful, but large product draws show longer-term tightness.”

Official data from the EIA is due at 10:30 a.m. EDT. Analysts expect a crude draw, though API’s surprise could shift expectations.

🔸 OPEC+ Output Holds Steady

According to the Platts OPEC+ survey, group production was unchanged in April at 41.01M bpd, despite planned increases:

• OPEC: +20,000 bpd to 26.86M bpd

• Non-OPEC: −20,000 bpd to 14.15M bpd

Some members overproduced again:

• April overproduction: 171,000 bpd (↓ from 319,000 in March)

• Iraq and Kazakhstan reduced output slightly but remained over-quota

Analysts remain skeptical of enforcement around compensation cuts.

The market is awaiting OPEC’s official monthly report later today for confirmation of secondary source data.

🔸 Summer Fuel Season Approaches

Refined product draws are being closely watched as countries head into peak summer driving season. Lower gasoline inventories may help offset bearish crude sentiment.

🔸 Strategic Reserve Rebuild Continues

The Strategic Petroleum Reserve (SPR) added another 500,000 barrels, reaching 399.6M barrels—still far below pre-2021 levels after massive draws under the Biden administration.

🔸 Fed Watching Trade-Driven Inflation Closely

Chicago Fed President Austan Goolsbee said that April’s cooler inflation data may not yet reflect Trump’s recent import tariffs. The Fed is in wait-and-see mode as further trade policy impact plays out.

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📅 What’s Ahead:

• EIA Inventory Data (10:30 a.m. ET)

• OPEC+ Ministerial Session – May 28

• Full OPEC+ Meeting – June 1

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