Oil steadies as us debt optimism offsets rising crude stockpiles

West Texas Intermediate futures traded below $73 a barrel after the biggest daily advance in almost two weeks. President Joe Biden expressed confidence that negotiators would reach an agreement to avoid a catastrophic default, while House Speaker Kevin McCarthy remained hopeful of a deal, Bloomberg reported.

Oil is still lower for the year as monetary tightening in the US and China’s lackluster economic growth weigh on the demand outlook, while supply has remained robust. Refining margins have been squeezed and at least one Asian processor is planning to cut operating rates from June.

US crude inventories expanded by 5 million barrels last week, the biggest gain since mid-February, according to government data Wednesday. Stockpiles at the storage hub at Cushing, Oklahoma, rose for a fourth week, while distillate demand fell to the lowest seasonal level in a decade, excluding in 2020.

“The oil market continues to be driven by external developments, rather than fundamentals,” said Warren Patterson, head of commodities strategy for ING Groep NV. “The market ignored a largely bearish EIA inventory report.”