Crude oil heads lower, consolidating after U.S. inventories build
By Peter Nurse
Investing.com -- Oil prices edged lower Thursday, handing back some of the week’s healthy gains after U.S. crude stocks rose strongly, raising further doubts about the strength of demand in the world’s largest consumer.
By 09:45 ET (14:45 GMT), U.S. crude futures traded 1.1% lower at $77.62 a barrel, while the Brent contract fell 1% to $84.19 a barrel.
Official data, from the Energy Information Administration, showed on Wednesday that U.S. oil inventories grew for a seventh consecutive week, the longest such streak since 2020, while rises in gasoline and distillate stockpiles indicated that retail fuel demand remained weak.
“Crude oil inventories grew by 2.42MMbbls, which takes total U.S. commercial inventories to a little more than 455MMbbls - a level last seen in June 2021,” said analysts at ING, in a note. “Similarly, crude oil inventories at Cushing increased by 1.04MMbbls, which leaves stocks at the WTI delivery hub at their highest level since July 2021.”
However, despite this session’s losses, both benchmarks are still around 3% higher this week, largely on optimism over a demand recovery in China, the world’s largest importer of crude, as it has ended more than three years of stringent COVID mobility restrictions.
The International Energy Agency earlier this week reiterated its forecast for a strong recovery in Chinese demand this year, seeing the Asian economic giant delivering around half of the forecast 2 million barrels a day increase in global oil demand this year.
Saudi Arabian think tank KAPSARC added to the theme Thursday, saying it expected Chinese demand to rise by an average of 550,000 barrels a day.
On the supply side, the think tank noted that some 820,000 barrels a day of Russian output will be lost to western sanctions and price cap measures, adding support to the market.
Additionally, while some pipeline flows from Iraq to Turkey have resumed after the major earthquake earlier this week, exports from the major Ceyhan port are yet to be resumed amid bad weather conditions.
The United States on Thursday imposed sanctions on six Iran-based petrochemical manufacturers and their subsidiaries and three firms in Malaysia and Singapore linked with the production, sale and shipment of Iranian oil products.
This raises the temperature between the two countries, and makes the efforts to revive Iran's 2015 nuclear deal increasingly unlikely to succeed.
Related Articles
Crude oil heads lower, consolidating after U.S. inventories build
Natural gas storage sees higher-than-forecast draw of 217 bcf last week
Kremlin says those behind Nord Stream blasts must be punished