OIL prices closed slightly lower on Tuesday on signs of easing supply concerns, while market participants shifted their focus to US stockpiles data due later today and Wednesday.

Brent crude futures settled 17 cents lower at US$83.16 a barrel, and US West Texas Intermediate crude futures closed 10 cents lower at US$78.38.

Prices fell further in thin post-settlement trading after market sources said that data from the American Petroleum Institute showed a jump in US crude and fuel stocks last week. Rising inventories, typically a sign of weak demand, have defied analysts’ expectations in recent weeks.

Analysts polled by Reuters forecast a decrease in US oil and fuel stockpiles, and official data from the US Energy Information Administration (EIA) is due at 10.30 am ET (1430 GMT) on Wednesday.

Brent crude futures traded at US$82.98 a barrel by 4.48 pm ET, 35 cents lower than Monday’s closing price, and WTI futures were down 23 cents to US$78.26 a barrel. US petrol futures and ultra-low sulfur diesel futures also fell in extended trading.

“If EIA shows less barrels are going into the refineries, then that is a problem for crude oil here,” Mizuho analyst Robert Yawger said. “Heading into peak summer driving season we should be drawing, not building,” he added.

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Current global inventory data shows crude oil and petroleum supplies are running 1.1 million barrel per day above forecasts in developed economies, according to an analysis by energy brokerage StoneX.

“Global inventories remain in a building phase and has accelerated recently,” StoneX analyst Alex Hodes wrote to clients on Tuesday.

The EIA on Tuesday raised its forecasts for this year’s world oil and liquid fuels output and lowered its demand expectations, pointing to a well-supplied market as opposed to prior forecasts that showed under-supply.

The premium of the first-month Brent contract to the six-month contract slipped to US$2.90 a barrel on Tuesday, the lowest since mid-February, another sign of market participants betting on easing supply tightness.

Last week, Brent and WTI had their steepest weekly losses in three months as weak US jobs data fueled hopes for interest rate cuts.

Oil prices found some support in Tuesday’s session from a US government solicitation to buy more than 3 million barrels of oil for the Strategic Petroleum Reserve (SPR).

Oil traders largely looked past escalating tensions in the Middle East, where the Israeli military seized control of the Rafah border crossing between the Gaza Strip and Egypt and its tanks pushed into the southern Gazan town of Rafah, as mediators struggled to secure a ceasefire agreement.

“Instead, their focus appears directed towards the uncertainties surrounding global economic growth prospects and the anticipated impact of sluggish growth on oil demand,” said Ricardo Evangelista, senior analyst at financial brokerage ActivTrades. REUTERS