Oil Prices Rise Amid U.S. Inventory Uncertainty

by Warren Seah

Price Movements:

  • West Texas Intermediate: April delivery rose 0.2% to $78.08 a barrel.
  • April Brent Crude: Global benchmark up 0.2% at $83.20 a barrel.
  • March Gasoline: Fell 0.2% to $2.281 a gallon.
  • March Heating Oil: Edged down 0.1% to $2.66 a gallon.
  • March Natural Gas: Dropped 2% to $1.737 per million British thermal units.

Market Drivers:

Oil futures remain near recent highs, with ongoing focus on Middle East developments and crude demand. Tighter physical supplies indicated by increasing backwardation, where nearby contract prices exceed longer-dated futures.

Sharp Rise in U.S. Crude Inventories

Recent industry data has indicated another significant increase in U.S. crude inventories.

American Petroleum Institute Report

According to analysts, the American Petroleum Institute reported a substantial rise of 7.2 million barrels in U.S. crude stocks last week. Additionally, supplies at the Nymex delivery hub in Cushing, Oklahoma, saw an increase of 700,000 barrels. Although there was a mix in product inventories – gasoline up 420,000 barrels and distillate supply down 2.9 million barrels.

Official Energy Information Administration Data

The official data from the Energy Information Administration is set to be released Thursday morning. Analysts surveyed by S&P Global Commodity Insights are expecting a 4.4 million barrel increase in crude inventories, bringing the total to around 444 million barrels for the week ended Feb. 16.

Refinery Operations and Maintenance

The survey also indicates that refinery runs are expected to remain low for the rest of the month due to various factors including BP PLC’s Whiting facility in Indiana being shut down because of an unexpected power outage, along with ongoing maintenance at other refineries.

Natural Gas Futures Pressure

Following a bounce on Wednesday driven by Cheseapeake Energy Corp.’s capital plan announcement supporting production in the range of 2.65 to 2.75 billion cubic feet per day, natural gas futures are facing renewed pressure. In fiscal 2023, Cheseapeake produced the equivalent of 3.43 billion cubic feet per day, with 98% being natural gas.

Natural Gas Storage Forecast

Analysts are forecasting a significant 65-billion cubic feet withdrawal from U.S. natural gas storage for the week ending Feb. 16, based on a survey conducted by S&P Global Commodity Insight. This anticipated trend could have implications for the natural gas market in the upcoming weeks.

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