U.S. oil prices set for first gain in 7 sessions as data show weekly decline in gasoline supplies
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Oil futures held on to their gains on Thursday, with U.S. prices on track to notch their first gain in seven sessions, as data showed a weekly decline in domestic gasoline supplies along with a nearly 8 million-barrel climb in crude inventories.
Price action
-
West Texas Intermediate crude for April delivery
CL.1,
+1.47% CLJ23,
+1.47%
rose $1.47, or 2%, to $75.42 a barrel on the New York Mercantile Exchange, trimming its weekly decline to 1.4% after it fell for a sixth straight session on Wednesday. -
April Brent crude
BRNJ23,
+1.48% ,
the global benchmark, rose $1.51, or 1.9%, to $82.11 a barrel on ICE Futures Europe. May Brent
BRN00,
+1.32% BRNK23,
+1.32% ,
the most actively traded contract, was up $1.42, or 1.8%, at $81.87 a barrel. -
Back on Nymex, March gasoline
RBH23,
+1.83%
rose 2.3% to $2.3923 a gallon, while March heating oil
HOH23,
-1.55%
edged down by 0.2% to $2.7097 a gallon. -
March natural gas
NGH23,
+3.17%
added 3.2% to $2.243 per million British thermal units after a 4.9% rise Wednesday.
Supply data
The Energy Information Administration on Thursday reported that U.S. crude inventories rose by 7.6 million barrels for the week ended Feb. 17.
On average, analysts forecasted a climb of 1 million barrels, according to a poll conducted by S&P Global Commodity Insights. The American Petroleum Institute, an industry trade group, late Wednesday said U.S. crude inventories jumped by 9.9 million barrels last week, according to a source citing the data.
The EIA report, which was released a day later than usual due to Monday’s Presidents Day holiday, also showed a weekly inventory decline of 1.9 million barrels for gasoline, while distillate supplies rose by 2.7 million barrels. The analyst survey had forecast inventory declines of 400,000 barrels for gasoline and 1.3 million barrels for distillates.
Crude stocks at the Cushing, Okla., Nymex delivery hub rose by 700,000 barrels for the week, the EIA said.
Elsewhere in the energy market, U.S. natural-gas futures have dropped about 19% in February and more than 51% so far in 2023, slumping in reaction to mild winter weather and strong domestic supplies.
Commodities Corner: Why the wait for lower heating bills may last for ‘months to come’
The EIA released weekly data on natural-gas storage Thursday showing domestic natural-gas supplies fell by 71 billion cubic feet for the week ended Feb. 17.
Analysts surveyed by S&P Global Commodity Insights, on average, were looking for a withdrawal of 72 billion cubic feet, or bcf, from domestic storage.
The five-year average drawdown for the period is 177 bcf, while supplies saw a decline of 138 bcf for the same week last year, according to S&P Global Commodity Insights.
Other market drivers
Crude has struggled in February as investors recalibrated expectations for Federal Reserve rate hikes. Fed action has stoked fears that the effort to bring down inflation could trigger a sharp economic slowdown that would weigh on demand for crude and fuel.
Minutes of the Fed’s Jan. 31-Feb. 1 policy meeting released Wednesday afternoon affirmed that policy makers were solidly behind plans to continue raising rates, but offered no major surprises.
Meanwhile, analysts said rising U.S. inventories were likely to keep a lid on prices.
Crude will continue to struggle because “U.S. inventories remain sky-high, a likely symptom of higher-than-expected U.S. and Russian production and the loss of gas-to-oil switching, which continue to leave global markets awash with current inventory,” said Stephen Innes, managing director of SPI Asset management, in a note.
A sharp rise in natural-gas prices following Russia’s invasion of Ukraine, which took place a year ago Friday, had led some European power providers to burn oil, boosting demand for crude. Natural-gas prices subsequently tumbled.
Read: Why U.S. fuel prices continue to feel the effects of Russia’s invasion of Ukraine
Anniversary
Friday, Feb. 24, will mark the one-year anniversary of Russia’s invasion of Ukraine.
Read: The real impact of Russia’s invasion of Ukraine on commodities
“The war itself has not yet materially affected actual volumes of oil flows globally, but war, by its very nature, introduces massive uncertainty,” said Jim Burkhard, vice president and head of crude oil market and energy and mobility research at S&P Global Commodity Insights.
The Russia-Ukraine war was a great market driver in 2022, and will be in 2023 as well, but there are “additional drivers the market is focusing on for 2023: China’s reopening and dynamics of OPEC+ relations between Saudi Arabia and Russia,” said Burkhard, in emailed commentary. “Government intervention in the oil market, particularly by the U.S., could again have an impact as it did in 2022.”
Overall, “oil markets are now a reflection of divisions between Russia and the West and China and the West,” said Burkhard.
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