2024-01-10 22:45:25
International oil prices fell and closed lower on Wednesday (10th) after U.S. officials announced an unexpected increase in commercial crude oil supply last week, and gasoline and distillate inventories increased more than expected.
energy commodity prices
- West Texas Intermediate (WTI) crude futures for February delivery fell 87 cents, or 1.2%, to settle at $71.37 a barrel. WTI futures were trading around $73.23 a barrel ahead of the supply report.
- Delivered in MarchBrent crude oil (Brent) futures fell 79 cents, or 1%, to $76.80 a barrel.
- Gasoline futures for February delivery fell 0.5% to settle at $2.07 a gallon.
- Delivered in FebruaryThermal Fuel FuturesPrices fell 1.9% to $2.60 per gallon.
- Natural gas futures prices for February delivery fell 4.7% to close at US$3.04 per million Btu. Natural gas futures rose more than 7% the previous day, the largest one-day gain since mid-June.
supply data
The U.S. Energy Information Administration (EIA) announced that last week (ending January 5), U.S. commercial crude oil supply increased by 1.3 million barrels, gasoline supply increased by 8 million barrels, and distillate supply increased by 6.5 million barrels.
According to an S&P Global Commodity Insights survey, analysts on average expected commercial crude oil supplies to fall by 900,000 barrels last week, gasoline inventories to increase by 4.9 million barrels, and distillate inventories to increase by 3.7 million barrels.
Sources quoted data as saying that the American Petroleum Institute (API) announced late on Tuesday that U.S. crude oil inventories fell by 5.2 million barrels last week.
“Refining activity continues to be strong, leading to another strong week of growth in petroleum products, while the customary decline in crude oil exports at the beginning of the month also helped encourage a small increase in crude oil inventories,” said Matt Smith, chief analyst for the Americas at Kpler.
Smith said bearish supply reports were countering support from supply disruptions in Red Sea shipping and Libya. However, growth in oil inventories will slow as refining activity is set to drop sharply in the coming weeks as refineries carry out maintenance work.
The EIA report also noted that crude oil inventories at the Nymex delivery center in Cushing, Oklahoma, fell slightly by 500,000 barrels last week.
market drivers
Crude oil futures ended higher on Tuesday, recouping some of Monday’s losses after Saudi Arabia cut its official crude selling price.
Stephen Innes, managing partner at SPI Asset Management, said Saudi Arabia’s recent price cuts were seen as “a negative signal, indicating supply concerns and Saudi unease about the potential loss of market share to non-OPEC suppliers.”
According to reports, the Israeli military expects the war against Hamas to last until the end of 2024. The Israel-Kazakhstan war may escalate into an increase in crises in the wider region and may disrupt oil production in the Middle East, causing oil prices to rebound on Tuesday.
Innes said the oil market is likely to “remain highly volatile for the foreseeable future, with potential supply disruptions in the Strait of Hormuz offsetting supply and demand-related concerns”.
Adjusting market premiums to accommodate longer oil shipping routes, avoidance of the Red Sea and higher marine insurance costs are already built into prices and “reflect the market’s response to the continued disruption caused by the Houthi rebels.”
Looking ahead, Innes believes that the most obvious downside risk to crude oil is “OPEC+’s ability to further curb supply and ensure that all OPEC adheres to production regulations”, because the last OPEC+ meeting was held in late November last year, when the market began to worry about OPEC+ (especially OPEC+). Saudi Arabia) may have reached the upper limit of its production reduction commitments.
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