Cyprus Mail

Oil slips after large US crude stock build

oil fuel energy
(file photo)

Oil prices fell on Thursday after a larger-than-expected jump in US crude inventories raised doubts about the strength of demand in the world’s largest economy and top oil consumer.

Brent crude futures fell 38 cents, or 0.5 per cent, to $81.22 a barrel at 0837 GMT, while US West Texas Intermediate crude futures declined 43 cents, or 0.6 per cent, to $76.21 a barrel.

Both contracts lost more than $1 a barrel on Wednesday, pressured by the rise in US crude inventories, as refining dropped to its lowest levels since December 2022.

The Energy Information Administration (EIA) said US crude inventories jumped by 12 million barrels to 439.5 million barrels in the week to Feb. 9, far exceeding analysts’ expectations in a Reuters poll for a 2.6 million-barrel rise.

While the stock build made traders question demand, some analysts said it was largely driven by lower refinery utilisation rates, especially as BP’s (BP.L) 435,000 barrels per day Whiting plant in Indiana is shut.

“The continued outage at BP’s Whiting refinery will have contributed to lower run rates, along with some other refinery maintenance. Lower refinery run rates meant that gasoline stocks declined,” the analysts said.

On the supply side, Kazakhstan said it will compensate for its oil overproduction in January within the next four months, in line with its OPEC+ commitments. Iraq also said it will review its production and address any excess output above its OPEC+ voluntary cuts in the coming four months, if found.

ANZ analysts in a note on Thursday looked ahead to the March meeting of the Organization of the Petroleum Exporting Countries when the group and allies (OPEC+) will decide whether to extend output curbs.

“Any signs that extension looks unlikely would weigh on sentiment across the oil market,” their note said.

Offsetting the larger-than-expected crude supplies, the EIA data showed that gasoline and distillate stocks fell more than forecast. Gasoline stocks fell by 3.7 million barrels to 247.3 million barrels versus expectations for a 1.2 million-barrel draw.​

Distillate stockpiles declined by 1.9 million barrels to 125.7 million barrels, compared with expectations for a 1.6 million-barrel drop.

Fuel demand is holding steady, supported by a return to pre-COVID-19 levels of air travel, JPMorgan analysts said.

“Our high frequency demand indicators are showing oil demand increasing by 1.6 mbd (barrels per day) in the first two weeks of February vs. January,” JPMorgan Commodities Research analysts said in a note, pointing to a pick-up in travel in China during the Lunar New Year holiday.

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