Oil rises on supply concerns

Oil rose after an industry report showed U.S. inventories were shrinking, with investors eagerly awaiting a report from the International Energy Agency that could shed light on market balance in the second half. Brent crude rose to $83 a barrel after falling 1.2 percent on Tuesday as persistent U.S. inflation weighed on the demand outlook. U.S. crude traded above $78. The American Petroleum Institute said crude inventories nationwide fell by 3.1 million barrels last week, according to people familiar with the data, with a decline also seen at the closely watched Cushing, Oklahoma, hub. The Paris-based IEA’s outlook is due later on Wednesday and will follow a monthly assessment by the Organization of the Petroleum Exporting Countries. The cartel’s analysis showed that OPEC+ countries, which participated in the group’s latest round of output cuts, exceeded their quotas last month. Oil has gained this year as OPEC+ has cut output to prevent oversupply and support global prices. Members are grappling with how much crude they can pump at a meeting on June 1 to decide whether to extend the restrictions, with many major exporters looking to increase their recognised capacity levels. “It’s not certain yet that OPEC+ restrictions will be eased later in the year” because of Saudi Arabia’s incentive to push higher prices to balance its budget, said Vishnu Varathan, head of Asia economics and strategy at Mizuho Bank in Singapore. That could mean “anxious and tense dynamics” within OPEC+ at a time when other members are trying to boost production.