U.S. crude oil recovers losses after surprise stockpile decline

Crude oil futures rose Wednesday, recovering losses from earlier in the session as U.S. crude inventories fell.

Oil prices found support after U.S. commercial crude stockpiles declined by 1.4 million barrels in the first week of May, according to official data from the Energy Information Administration. The decline was a surprise compared to industry data that indicated a 509,000 barrel buildup.

Prices have come under pressure as of late on rising inventories with U.S. stockpiles surging in the last week of April.

“Oil market indicators have turned softer in recent weeks, and prices have declined from recent peaks,” Morgan Stanley analysts said in a research note. “The oil market is not tight now, but we see seasonal strength ahead in coming months.”

Here are Wednesday’s closing energy prices:

• West Texas Intermediate June contract: $78.99 a barrel, up 61 cents, or 0.78%. Year to date, U.S. crude oil has risen 10%.
• Brent July contract: $83.58 a barrel, up 42 cents, or 0.51%. Year to date, the global benchmark has risen 8.5%.
• RBOB Gasoline June contract: $2.53 per gallon, down 0.46%. Year to date, gasoline futures are up about 20%.
• Natural Gas June contract: $2.19 per thousand cubic feet, down 0.91%. Year to date, gas is down 13%.

Oil prices have fallen more than 7% since reaching their April highs when traders bid up prices on fears that Iran and Israel would go to war. Investors have largely sold off the war premium since then, with Morgan Stanley removing $4 per barrel of risk from its oil price forecast for the year.

Still, the outlook for summer oil demand looks robust and OPEC+ will likely extend its production cuts until the end of the year, according to Morgan Stanley. This should support a 2 million barrel per day deficit in the third quarter and Brent prices at $90 over the summer.

OPEC and allies, including Russia, will meet on June 1 to discuss its production policy. Russian Deputy Prime Minister Alexander Novak said Tuesday that there is currently no discussion within OPEC+ of increasing oil output.

In the Middle East, CIA Director William Burns is due in Israel to discuss the latest Gaza cease-fire negotiations in Cairo, a source familiar with the matter told NBC News.