Oil Holds Advance as Risk-On Mood Eclipses US Stockpile Build

(Bloomberg) — Oil steadied after closing at a seven-week high as a sustained risk-on mood in wider markets outweighed signs of further stockpile growth.

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Brent crude traded above $85 a barrel after posting the highest close since April 30, while West Texas Intermediate was near $81. The S&P 500 rose to another record on Tuesday, which has helped extend a powerful recovery in oil prices that has also been propelled by trend-following technical traders.

The American Petroleum Institute, meanwhile, reported US crude inventories rose by 2.26 million barrels last week, according to people familiar with the figures. If confirmed by official data, that would be the third increase in a row. Stockpiles at the Cushing, Oklahoma, hub also climbed, according to the API.

Oil has recovered from a loss at the beginning of the month, when OPEC+ said it would bring barrels back to the market, with the group clarifying that such a plan was conditional. Key timespreads have ballooned, indicating stronger near-term demand, while refiners in Asia are restoring some capacity following maintenance despite weak margins, boosting crude consumption.

“There are implicit signs that refiners are getting ready for the summer season,” said Tamas Varga, an analyst at brokerage PVM. “Front-month Brent is more than $8 a barrel above the post-OPEC+ meeting trough. It shows genuine optimism that the global oil balance will eventually tighten.”

Still, with oil’s surge over the past two weeks, there are now signs that futures are nearing overbought levels. Brent’s relative strength index on a nine-day basis has exceeded 70, indicating that a pullback may be on the horizon.

Full-day trading volumes in oil futures are likely to be lower on Wednesday because of a holiday in the US.

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