Brent crude for May rose 15 cents, or 0.2%, to $67.67 a barrel by 0144 GMT, while U.S. West Texas Intermediate crude for April was at $64.24 a barrel, up 23 cents, or 0.4%.
Prices gained support last week from the OPEC+ decision to largely maintain production cuts in April. They then initially jumped on Monday, with Brent rising above $70 a barrel, after attacks by Yemeni Houthis on Saudi’s oil heartland.
Investors took advantage of that rally to lock in profits, ANZ analysts said in a note, adding that market sentiment was slightly bearish on expectations that U.S. crude inventories could rise for a third straight week.
Crude inventories rose by 12.8 million barrels in the week to March 5, according to trading sources, citing data from industry group the American Petroleum Institute. Analysts had expected a build of about 800,000 barrels in a Reuters’ poll.
Official figures from the Energy Information Administration (EIA) are expected Wednesday at 10:30 a.m. ET.
Meanwhile, higher prices are expected to bring more U.S. crude supplies back online.
U.S. crude production is still expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.15 million bpd, the EIA said on Tuesday, but that’s a smaller decline than its previous monthly forecast for a 290,000-bpd drop.
The OPEC+ grouping – the Organization of the Petroleum Exporting Countries (OPEC) and allied producers – may become the victim of its own success, analysts at EFG bank said, as higher prices resulting from supply restraint could incentivise U.S. oil production.
“The current WTI oil price is well above the level needed to incentivise a substantial increase in U.S. production, which according to surveys by the Dallas Fed and the Kansas City Fed stands at around $56 per barrel,” EFG said.
“The longer it remains above this threshold, the greater the incentive for U.S. and other non-OPEC+ producers to increase production.” (Reporting by Florence Tan; Editing by Kenneth Maxwell)
