(Bloomberg) -- Oil edged lower, after earlier touching a seven-week high, as signs of further growth in stockpiles tempered investor optimism spurred by rising equity prices.

Brent crude settled near US$85 a barrel after earlier hitting the highest intraday price since May 1, while West Texas Intermediate was little changed above $81 a barrel. The American Petroleum Institute reported US crude inventories rose by 2.26 million barrels last week, according to people familiar with the figures. If confirmed by official data, that would be the third increase in a row. Stockpiles at the hub in Cushing, Oklahoma, also climbed, according to the API. 

The gain in inventories offset the positive outlook caused by rising stock prices. The S&P 500 rose to another record on Tuesday, which has helped extend a powerful recovery in oil prices that has also been propelled by trend-following technical traders. 

Oil has recovered from a loss at the beginning of the month, when OPEC+ said it may bring barrels back to the market, with the group clarifying that such a plan was conditional. Key timespreads have ballooned, indicating stronger near-term demand, while refiners in Asia are restoring some capacity following maintenance despite weak margins, boosting crude consumption.

“There are implicit signs that refiners are getting ready for the summer season,” said Tamas Varga, an analyst at brokerage PVM. “Front-month Brent is more than $8 a barrel above the post-OPEC+ meeting trough. It shows genuine optimism that the global oil balance will eventually tighten.”

Still, with oil’s surge over the past two weeks, there are now signs that futures are nearing overbought levels. Brent’s relative strength index on a nine-day basis has exceeded 70, indicating that a pullback may be on the horizon.

Full-day trading volumes in oil futures are likely to be lower on Wednesday because of a holiday in the U.S.


  • Brent for August settlement fell 0.3 per cent to settle at $85.07 a barrel in New York.
  • WTI for July delivery fell 0.1 per cent to $81.47 a barrel at 3:14 p.m. in New York.