Oil futures rose for a second straight session on Wednesday, but pared some of their gains after the U.S. government reported an unexpected weekly rise in commercial crude oil supplies and larger-than-expected increases in gasoline and distillate inventories.
Price movement
-
West Texas Intermediate crude for February delivery CL00,
+0.15% every.1,
+0.15% clg 24,
+0.15%
The price of crude oil rose 17 cents, or 0.2%, to $72.41 a barrel on the New York Mercantile Exchange. Prices were trading around $73.23 before the supply data. -
Brent crude for March BRN00,
-0.06% BRNH24,
-0.06% ,
The global index rose 25 cents, or 0.3%, to $77.84 a barrel on the ICE Futures Europe exchange. -
February Gasoline RBG24,
+0.48%
Gasoline rose 0.5% to $2.0874 per gallon, while HOG24 heating oil rose for February.
+0.09%
It added 1% to $2.6525 per gallon. -
Natural gas for February delivery NGG24,
-5.05%
It traded at $3.023 per million British thermal units, down 5.2%, after rising more than 7% on Tuesday — the biggest daily rise since mid-June.
Display data
Oil prices on Wednesday pared some of their early gains after the Energy Information Administration reported that U.S. commercial crude oil inventories rose by 1.3 million barrels in the week ending January 5.
On average, analysts polled by S&P Global Commodity Insights expected the report to show a decline of 900,000 barrels. Late Tuesday, the American Petroleum Institute trade group said crude oil inventories fell by 5.2 million barrels, according to a source citing the numbers.
The EIA report also revealed an increase in supply of 8 million barrels for gasoline and 6.5 million barrels for distillates.
“Continued strength in refining activity has led to another week of solid product construction,” said Matt Smith, senior Americas analyst at Kpler. A decline in crude oil exports, as is typical at the beginning of each month, also helped “encourage a slight increase” in crude oil inventories.
Analysts had expected weekly supply gains of 4.9 million barrels for gasoline and 3.7 million barrels for distillates, according to S&P Global Commodity Insights.
“Right now, this full house of bearishness is offsetting the supportive effect of Red Sea concerns and Libyan supply disruptions,” Smith said. However, he said refining activity will decline significantly in the coming weeks, as maintenance work begins to slow the buildup of product inventory.
The EIA also reported that crude oil inventories at the Nymex's Cushing, Oklahoma, delivery center fell by 500,000 barrels last week.
Market driving factors
Oil futures are still on track for back-to-back gains after Monday's decline due to Saudi Arabia's decision to reduce the official selling price of crude oil to all regions.
Stephen Innes, managing partner at SPI Asset Management, told MarketWatch that the latest price cut by the Saudis is seen as “a negative signal, indicating supply concerns and growing concern about potential market share losses to non-OPEC suppliers within Saudi ranks.” .
is reading: Record US oil production sparks a market share battle with Saudi Arabia and OPEC+
The rise in oil prices on Tuesday came amid fears that the war between Israel and Hamas could turn into a broader conflict capable of threatening crude oil supplies from the Middle East, reignited after the Israeli military said it expects the war against Hamas to last until 2024.
Innes said the oil market was likely to remain “volatile for the foreseeable future, with potential supply disruptions through the Strait of Hormuz negating supply and demand concerns.”
He added that adjusting market premiums to accommodate longer oil shipping routes, avoiding the Red Sea and incurring higher marine insurance costs, had already been factored into prices and “reflects the market’s response to the ongoing disruptions caused by Houthi activities.”
Looking ahead, Innes believes the most significant downside risk for crude oil prices lies in “OPEC+’s ability to further curb supply and ensure compliance among all members.”
He said concerns were raised during the last OPEC+ meeting at the end of November “when the cartel was unable to develop a broad new agreement.” This has raised concerns that OPEC+, and especially Saudi Arabia, may have reached the limits of their commitment to it [output] Discounts.”
