Oil prices dip ahead of U.S. stocks data

Oil prices slipped on Tuesday ahead of data shedding light on U.S. appetite for fuel during the summer driving season, with the Brent benchmark’s price structure indicating bulls are retreating.

By 0916 GMT, Brent crude futures were down 41 cents, or 0.6%, at $73.77 a barrel, while U.S. West Texas Intermediate (WTI) futures fell 42 cents, or 0.6%, to $68.95 a barrel, erasing some earlier gains.

Both contracts are trading broadly in the middle of a $10 a barrel range traced since early May.

U.S. inventory data from the American Petroleum Institute industry group is due later on Tuesday, followed by government data the next day. A Reuters poll indicated U.S. inventories probably fell in the week to June 23. [API/S] [EIA/S]

Brent’s six-month backwardation – a price structure whereby sooner-loading contracts trade above later-loading ones – is hovering near lows last seen in March, indicating shrinking concern about supply crunches.

For the two-month spread, the market is in shallow contango, the opposite price structure, indicating traders are factoring in a currently slightly oversupplied market.

The oil market has shrugged off a clash between Moscow and Russian mercenary group Wagner which was averted on Saturday. Russian oil loadings have kept on schedule.

“The latest geopolitical flare-up quickly pales into insignificance compared to persistent macroeconomic considerations,” said PVM’s Tamas Varga.

This is the case despite Saudi Arabia’s pledge to slash output from July.

Much depends on whether Chinese oil demand picks up in the second half. Premier Li Qiang said China will take steps to boost demand and invigorate markets, without giving details.

Global gasoline demand grew by 365,000 bpd year-on-year, driven by strong U.S. gasoline data, with consumption at an eight-week high of 9.4 million bpd in the week of June 17, JP Morgan analysts said in a note.