Oil prices steady; U.S. demand concerns had caused losses

Investing.com--Oil prices edged higher Thursday, stabilizing after losses in the wake of an outsized build in U.S. gasoline and distillate inventories, while a price cut by top producer Saudi Arabia also weighed.

At 07:30 ET (11:30 GMT), Brent oil futures fell 0.2% to $64.75 a barrel, while West Texas Intermediate crude futures fell 0.2% to $61.74 a barrel. 

U.S. inventories shrink, but fuel stockpiles grow 

The crude benchmarks dropped over 1% in the prior session after government data showed on Wednesday that U.S. oil inventories shrank by a bigger-than-expected 4.3 million barrels in the past week.

But gasoline inventories grew 5.2 million barrels, much more than expected, while distillate stocks also grew 4.2 million barrels, much more than market forecasts.

The readings raised some questions over demand in the world’s biggest fuel consumer, especially heading into the travel-heavy summer season.

Concerns over slowing U.S. demand were exacerbated by softer-than-expected private payrolls data, which showed the labor market was cooling. The print came just days before key nonfarm payrolls data for May, which is due on Friday.

Markets also remained uncertain over U.S. trade policy, after President Donald Trump doubled his tariffs on steel and aluminum to 50%. A Wednesday deadline from Trump, for U.S. trading partners to submit their “best offers” for a trade deal, also passed with no new agreements being announced. 

Saudi Arabia cuts prices for Asia 

Oil prices were also pressured by a Reuters report indicating that Saudi Arabia has cut its July oil prices for Asian buyers to a two-month low.

The reduction indicated that the world’s biggest oil exporter was concerned over sluggish demand conditions. 

The price cut also came just days after the Organization of Petroleum Exporting Countries and allies (OPEC+), led by Saudi Arabia, agreed to increase production in July.

The production increase came despite concerns over slowing demand and a potential supply glut in oil markets, although it did spur some gains in oil prices, given that it was largely in line with output increases seen in the past two months. 

Saudi Arabia is targeting lower oil prices in part to punish overproduction by other members of the OPEC and secure a larger market share, recent reports showed.

Ambar Warrick contributed to his article.