Oil prices settle lower with U.S. crude supply up by 12 million barrels

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Oil futures settled lower Wednesday, with U.S. prices posting their first loss in eight sessions, after official data revealed a 12 million-barrel weekly rise in domestic commercial crude inventories and declines in gasoline and distillate stockpiles.

Price moves

  • West Texas Intermediate crude
    CL00,
    -0.56%
    for March delivery
    CL.1,
    -0.56%

    CLH24
    fell $1.23, or 1.6%, to settle at $76.64 a barrel on the New York Mercantile Exchange after posting gains in each of the last seven trading sessions.

  • April Brent crude
    BRN00,
    -0.48%

    BRNJ24,
    -0.51%,
    the global benchmark, declined by $1.17, or 1.4%, to $81.60 a barrel on ICE Futures Europe.

  • March gasoline
    RBH24,
    -0.89%
    fell by 3.2% to $2.32 a gallon, while March heating oil
    HOH24,
    -0.37%
    lost 3% to $2.81 a gallon.

  • Natural gas for March delivery
    NGH24,
    -3.12%
    settled at $1.61 per million British thermal units, down 4.7% for the session. Steep declines in prices for the commodity led it to its lowest finish since June 2020.

Supply data

There’s “no doubt” that seasonal refinery maintenance and the fact that the refinery in Whiting, Ind., is down caused part of the “impressive increase in weekly crude supplies,” said Phil Flynn, senior market analyst at the Price Futures Group.

BP’s
BP,
-0.59%
440,000-barrel-per-day Whiting oil refinery was reportedly shut down following a power outage earlier this month.

U.S. crude-oil refinery runs were down 297,000 barrels a day, week over week, and “that added up,” Flynn said.

Still, the rise in crude supplies does not erase the fact that there were big declines in gasoline and distillate inventories, he said.

The Energy Information Administration on Wednesday reported that U.S. commercial crude inventories rose by 12 million barrels for the week that ended Feb. 9.

The “enormous” buildup in crude stockpiles came as “domestic production has normalized and refinery runs continue to suffer amid both planned and unplanned maintenance,” said Troy Vincent, senior market analyst at DTN.

On average, analysts surveyed by S&P Global Commodity Insights forecast a weekly crude-supply climb of 2.9 million barrels. Late Tuesday, the American Petroleum Institute reported an inventory gain of 8.5 million barrels, according to a source citing the data.

U.S. crude-refinery inputs averaged 14.5 million barrels a day last week, 297,000 barrels per day less than the previous week’s average, the EIA reported.

The EIA also reported weekly supply declines of 3.7 million barrels for gasoline and 1.9 million barrels for distillates. The S&P Global Commodity Insights analyst survey showed forecasts for inventory declines of 2 million barrels for gasoline and 1.6 million barrels for distillates.

The product side of the market is “getting squeezed and that should support oil,” Flynn said.

In the long run, the oil market has pulled back partly because the buildup of crude supply was so “jaw-dropping,” but the data show that petroleum-product stocks are “tight” and refiners are going to have to do “some pretty impressive work to keep up with demand,” Flynn said.

U.S. oil production was unchanged in the latest week, holding at a record 13.3 million barrels a day, the EIA said, while crude stocks at the Cushing, Okla., Nymex delivery hub were up 700,000 barrels at 28.8 million barrels.

Read: Natural-gas prices at lowest since 2020 on mild weather, ample supply ‘double whammy’

Other market news

The IEA held a two-day ministerial meeting that ended Wednesday and emphasized the group’s commitment to safeguarding energy security and speeding up clean-energy transitions.

Comments out of the IEA this week were not market-moving. Rather, “they just affirm some of the key ongoing themes in the market for this year — that OPEC+ is continuing to be compliant in keeping barrels off the market, but only to make room for non-OPEC production growth,” said Matt Smith, lead oil analyst for the Americas at Kpler.

The IEA plans to release its monthly oil report Thursday.

Meanwhile, Smith said, the growth in China’s energy demand is “nothing to get excited about.”

Also see: Why chocolate lovers will pay more this Valentine’s Day than they have in years

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