Oil futures headed higher for a second straight session Wednesday, but pared some of their gains after the U.S. government reported an unexpected weekly rise in commercial crude supplies and larger-than-expected increases in gasoline and distillate inventories.Price action
West Texas Intermediate crude for February delivery
CL00,
+0.25%
CL.1,
+0.25%
CLG24,
+0.25%
was up 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.
March Brent crude
BRN00,
+0.04%
BRNH24,
+0.04%,
the global benchmark, was up 25 cents, or 0.3%, at $77.84 a barrel on ICE Futures Europe.
February gasoline
RBG24,
+0.57%
tacked on 0.5% to $2.0874 a gallon, while February heating oil
HOG24,
-0.74%
added 1% to $2.6525 a gallon.
Natural gas for February delivery
NGG24,
-5.96%
traded at $3.023 per million British thermal units, down 5.2%, after climbing by more than 7% Tuesday — marking the largest daily rise since mid-June.
Supply data Oil prices Wednesday pared some of their early gains after the Energy Information Administration reported that U.S. commercial crude inventories rose by 1.3 million barrels for the week ended Jan. 5.
On average, analysts polled by S&P Global Commodity Insights expected the report to show a decline of 900,000 barrels. Late Tuesday, trade group the American Petroleum Institute said crude inventories fell 5.2 million barrels, according to a source citing the figures. The EIA report also revealed supply increases of 8 million barrels for gasoline and 6.5 million barrels for distillates. “Ongoing strength in refining activity has resulted in another week of solid builds to the products,” said Matt Smith, lead analyst, Americas, at Kpler. Lower crude exports, as is typical at the start of each month, has also helped to “encourage a minor build” in crude stockpiles. Analysts had forecast weekly supply gains of 4.9 million barrels for gasoline and 3.7 million barrels for distillates, according to S&P Global Commodity Insights. For now, “this full house of bearish builds is offsetting the supportive influence of Red Sea concerns and Libyan supply disruptions,” Smith said. However, refining activity is going to drop significantly in the weeks ahead, as maintenance kicks in to slow product inventory builds, he said. The EIA also reported that crude stocks at the Cushing, Okla., Nymex delivery hub edged down by 500,000 barrels last week.Market drivers Oil futures were still on track to post back-to-back gains after a Monday drop attributed to Saudi Arabia’s decision to cut its official selling price for crude to all regions. The recent price cut by the Saudis is seen as a “negative signal, indicating supply concerns and growing unease about potential market share losses to non-OPEC suppliers within the Saudi ranks,” Stephen Innes, managing partner at SPI Asset Management, told MarketWatch. Read: Record U.S. oil production sparks battle for market share with Saudi Arabia and OPEC+ Tuesday’s bounce in oil prices had come amid fears the Israel-Hamas war could spiral into a wider conflict capable of threatening crude supplies from the Middle East were reignited after the Israeli military stated that it expects the war against Hamas to continue through 2024. The oil market is likely to “remain on a roller coaster for the foreseeable future, with the potential disruption of supply through the Strait of Hormuz counteracting concerns related to supply and demand,” said Innes. Adjusting market premiums to accommodate longer oil shipping routes, avoiding the Red Sea and incurring higher maritime insurance costs, is already factored into prices and “reflects the market’s response to ongoing disruptions caused by Houthi activities, …
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West Texas Intermediate crude for February delivery
CL00,
+0.25%
CL.1,
+0.25%
CLG24,
+0.25%
was up 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.
March Brent crude
BRN00,
+0.04%
BRNH24,
+0.04%,
the global benchmark, was up 25 cents, or 0.3%, at $77.84 a barrel on ICE Futures Europe.
February gasoline
RBG24,
+0.57%
tacked on 0.5% to $2.0874 a gallon, while February heating oil
HOG24,
-0.74%
added 1% to $2.6525 a gallon.
Natural gas for February delivery
NGG24,
-5.96%
traded at $3.023 per million British thermal units, down 5.2%, after climbing by more than 7% Tuesday — marking the largest daily rise since mid-June.
Supply data Oil prices Wednesday pared some of their early gains after the Energy Information Administration reported that U.S. commercial crude inventories rose by 1.3 million barrels for the week ended Jan. 5.
On average, analysts polled by S&P Global Commodity Insights expected the report to show a decline of 900,000 barrels. Late Tuesday, trade group the American Petroleum Institute said crude inventories fell 5.2 million barrels, according to a source citing the figures. The EIA report also revealed supply increases of 8 million barrels for gasoline and 6.5 million barrels for distillates. “Ongoing strength in refining activity has resulted in another week of solid builds to the products,” said Matt Smith, lead analyst, Americas, at Kpler. Lower crude exports, as is typical at the start of each month, has also helped to “encourage a minor build” in crude stockpiles. Analysts had forecast weekly supply gains of 4.9 million barrels for gasoline and 3.7 million barrels for distillates, according to S&P Global Commodity Insights. For now, “this full house of bearish builds is offsetting the supportive influence of Red Sea concerns and Libyan supply disruptions,” Smith said. However, refining activity is going to drop significantly in the weeks ahead, as maintenance kicks in to slow product inventory builds, he said. The EIA also reported that crude stocks at the Cushing, Okla., Nymex delivery hub edged down by 500,000 barrels last week.Market drivers Oil futures were still on track to post back-to-back gains after a Monday drop attributed to Saudi Arabia’s decision to cut its official selling price for crude to all regions. The recent price cut by the Saudis is seen as a “negative signal, indicating supply concerns and growing unease about potential market share losses to non-OPEC suppliers within the Saudi ranks,” Stephen Innes, managing partner at SPI Asset Management, told MarketWatch. Read: Record U.S. oil production sparks battle for market share with Saudi Arabia and OPEC+ Tuesday’s bounce in oil prices had come amid fears the Israel-Hamas war could spiral into a wider conflict capable of threatening crude supplies from the Middle East were reignited after the Israeli military stated that it expects the war against Hamas to continue through 2024. The oil market is likely to “remain on a roller coaster for the foreseeable future, with the potential disruption of supply through the Strait of Hormuz counteracting concerns related to supply and demand,” said Innes. Adjusting market premiums to accommodate longer oil shipping routes, avoiding the Red Sea and incurring higher maritime insurance costs, is already factored into prices and “reflects the market’s response to ongoing disruptions caused by Houthi activities, …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]