Crude Firms as Strong Demand Trumps EIA Stockpile Build
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed higher shortly after the mid-session on Thursday despite the release of a not-so-friendly government inventories report. In keeping with this week’s theme, prices are being bolstered by strong demand and concerns about short-term supply disruptions.
At 18:19 GMT, March WTI crude oil futures are trading $85.68, down $0.12 or -0.14% and March Brent crude oil is at $88.52, up $0.08 or +0.09%. The United States Oil Fund ETF (USO) is at $61.66, up $0.61 or +1.00%.
EIA Reports First US Crude Build Since November, Gasoline Inventories Hit 11-Month High
U.S. crude oil stockpiles rose last week for the first time since November while gasoline inventories grew to an 11-month high, the Energy Information Administration (EIA) said on Thursday.
Crude inventories rose by 515,000 barrels in the week to January 14 to 413.8 million barrels, compared with analysts’ expectations in a Reuters poll for a 938,000-barrel drop.
Refinery crude runs fell by 120,000 bpd to 15.45 million bpd and utilization rates fell 0.3 percentage points to 88.1% of total capacity last week, the EIA said. Additionally, net U.S. crude imports rose last week by 21,000 bpd, data showed.
U.S. gasoline stocks rose by 5.9 million barrels in the week to 246.6 million barrels, the EIA said, compared with expectations for a 2.6 million-barrel rise.
Distillate stockpiles, which include diesel and heating oil, fell by 1.4 million barrels last week to 128 million barrels.
Finally, stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures, fell by 1.3 million barrels in the last week, the EIA said.
Strong Demand, Short-Term Supply Disruptions Lift Prices
Prices have been dominated the past week by signs of strengthening demand and supply concerns.
Steady demand is one factor underpinning prices, with U.S. product supplied, a proxy for demand in the world’s largest consumer, reaching 21.2 million bpd over the past four weeks, ahead of the pre-pandemic pace.
Trading has also been dominated by supply concerns, from short-term issues like a temporary halt to flows in an Iraq-to-Turkey pipeline to a consistent shortfall from OPEC+ members in reaching targeted supply increases.
An attack by Yemen’s Houthis on the United Arab Emirates, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), heightened geopolitical risks.
Finally, the IEA said that while the oil market could be in a significant surplus in the first quarter of this year, inventories are likely to be well below pre-pandemic levels.