Feb 14, 2024: Oil prices declined in Asian trading on Wednesday following a report from a U.S. industry group indicating that crude stocks surged more than anticipated last week. Additionally, investors tempered their expectations for interest rate cuts by the U.S. Federal Reserve.
Brent futures dipped by 11 cents, or 0.13%, to $82.66 a barrel at 0403 GMT, while U.S. West Texas Intermediate (WTI) crude futures slipped 3 cents to $77.84 a barrel.
DBS Bank’s energy sector team lead, Suvro Sarkar, remarked, “The (price) rally has been cut short by the higher than expected US inflation print, which has the potential to push back the rate cut cycle.” Sarkar added, “In addition, inventory builds are likely to surprise on the upside this week, and an outage at the BP refinery in Whiting is also not helping matters on the demand side.”
According to market sources citing American Petroleum Institute figures released late on Tuesday, U.S. crude oil inventories surged by 8.52 million barrels in the week ended Feb. 9, surpassing analysts’ expectations of a 2.6 million barrel increase.
“The builds in crude oil were fairly bearish. However, this was offset by large product declines,” noted ING analysts. The data likely reflected the impact of the 435,000 barrels per day outage at the Whiting refinery.
The API data also revealed that gasoline inventories plummeted by 7.23 million barrels and distillate stocks fell by 4.02 million barrels, both significantly larger declines than anticipated by analysts.
Official data from the U.S. Energy Information Administration is expected on Wednesday at 1530 GMT.
Additionally, concerns about supply levels from members of the Organization of the Petroleum Exporting Countries (OPEC) contributed to the market’s weakness. ANZ analysts highlighted, “OPEC’s monthly oil market report… raised some concerns about the group’s adherence to its recent production cuts.” They added, “Only Kuwait and Algeria have implemented their share of cuts, with Iraq’s output well above the agreed quota.”
