Oil steadies with signs of tight market before US inventory data

Oil steadied after a two-day decline as traders assessed signs of near-term market strength — especially for diesel fuel — ahead of US stockpiles figures.

Brent futures traded near $69 a barrel, with a premium of 90 cents on the international benchmark’s prompt spread signaling tight availability for immediate supplies. Summer vacation driving is supporting demand in the US, while the nation’s inventories of distillates, a category that includes diesel, have touched the lowest level since 2005.

A US industry estimate showed a small build-up in nationwide crude stockpiles last week, with official government data due later Wednesday. In northern Iraq, a drone strike forced operator DNO ASA to suspend some output.

Oil has ticked higher this month — building on the upward trend since May — despite concerns that US President Donald Trump’s tariff onslaught will hurt demand, while plans by OPEC+ to rapidly continue reviving supplies may result in a glut later this year. Earlier this week, Goldman Sachs Group raised its Brent forecast for this half, although it remained cautious about 2026.

While global crude inventories have been swelling in recent months, the bulk of the accumulation has come in markets that have relatively little impact on futures prices, according to Morgan Stanley. The premiums traders are paying for more immediate supplies, a pattern known as backwardation, signal strong short-term demand.

“The Brent futures curve remains firmly in backwardation across the first four-to-six months — a structure that usually points to market tightness,” Morgan Stanley analysts including Martijn Rats said in a note, which highlighted what they described as an uneven distribution of inventory increases. “The builds have been in the Pacific, but Brent is priced in the Atlantic,” they said.

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