Oil prices fall more than 1% as market softens on rising inventories

Crude oil futures fell more than 1% on Wednesday as the market softens on rising inventories, though prices could firm later this year as demand increases during the summer driving season.

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

U.S. oil inventory data is due out later this morning. Stockpiles surged in the last week of April, putting pressure on prices.

Here are today’s energy prices:

• West Texas Intermediate June contract: $77.35 a barrel, down $1.04, or 1.33%. Year to date, U.S. crude oil has risen 8%.
• Brent July contract: $82.12 a barrel, down $1.04, or 1.25%. Year to date, the global benchmark has risen 6%.
• RBOB Gasoline June contract: $2.50 per gallon, down 1.75%. Year to date, gasoline futures are up about 19%.
• Natural Gas June contract: $2.26 per thousand cubic feet, up 2.36%. Year to date, gas is down 9.8%.

Oil prices have fallen 8% since 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.