Crude futures are lower for a third session in a row with the market refocusing on supply and demand balances after putting concerns about U.S. tariffs and Russia sanctions on hold, and API reporting another build in crude (and gasoline) stocks – the third straight weekly rise in inventories.

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.

API

• Crude +800k

• Cushing +100k

• Gasoline +1.9mm

• Distillates +800k

DOE

• Crude -3.86mm

• Cushing +213k

• Gasoline +3.39mm

• Distillates +4.17mm

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Price gauges indicate that availability is tight for the time being, with a premium of 81 cents on the international benchmark’s prompt spread, and US distillate inventories, which include diesel, touching the lowest level since 2005.

“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.

Oil has traded in a tight range over the past three weeks as strong summer demand is being matched with rising supply. OPEC+ has been adding 411,000 barrels per day to the market in monthly tranches that began in May and will boost that by 548,000 bpd in August.

The additional supply is boosting inventories.