On Tuesday, oil prices decreased following the US’s announcement that additional inventory will be released from the Strategic Petroleum Reserve, which has already caused a high degree of instability in the worldwide supply and demand balance.[0] At 9:15 ET, U.S. crude futures had decreased by $2.21 (2.8%) to $77.93 per barrel, and Brent crude futures had decreased by $2.01 (2.3[1] The two standards are projected to experience their greatest single-day percentage drops since February 3rd.[1]
The Energy Information Administration (EIA) reported on Wednesday that U.S. crude inventories rose by 16.283 million barrels during the week ended Feb. 10, and are now 8% above the five-year average. Commercial crude-oil stockpiles increased by 16.3 million barrels, to 471.4 million barrels. The American Petroleum Institute (API) late Tuesday had reported a 10.5 million barrel rise in U.S. crude inventories.[2]
According to the API data from last week, gasoline inventories increased by 846,000 barrels, bringing the total inventory increase to 5.261 million barrels.[3] Distillates increased by 1.728 million barrels following an increase of 1.109 million bpd the week before.[3] The weekly capacity utilization rate of refinery activity declined to 86.5%, a 1.4 percentage point decrease that was unexpected and contrary to analyst predictions of a 0.2 percentage point increase.[4]
The Paris-based International Energy Agency (IEA) Wednesday raised its 2023 global oil demand forecast by +200,000 bpd to 101.9 million bpd from a prior estimate of 101.7 million bpd, citing the reopening of China’s economy.[5] The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday also raised its projection for global oil demand growth and pointed to a tighter market in 2023.[6]
On Tuesday, oil prices decreased further following the release of inflation data that indicated the Federal Reserve may not reduce interest rates as much as had been predicted.[7] Monday’s session was volatile and caused West Texas Intermediate to plummet to nearly US$79 per barrel.[8] In line with a budget mandate from 2015, the United States is aiming to dispose of 26 million barrels from the Strategic Petroleum Reserve.[2] WTI crude oil was down following the US CPI but the bulls burst back to life taking out the shorts back to the start again.[9]
0. “Latest Oil Market News and Analysis for Feb 13” Bloomberg, 12 Feb. 2023, https://www.bloomberg.com/news/articles/2023-02-12/oil-edges-lower-as-slowdown-concerns-vie-with-russian-cutback
1. “Biden To Sell 26 Million Barrels From the Strategic Petroleum Reserve in Hopes of Preventing Summer Gas Surge” msnNOW, 14 Feb. 2023, https://www.msn.com/en-us/money/markets/biden-to-sell-26-million-barrels-from-the-strategic-petroleum-reserve-in-hopes-of-preventing-summer-gas-surge/ar-AA17u8FD?li=BBnb7Kz
2. “Oil declines on U.S. requirement to sell more crude from the SPR” BNN Bloomberg, 14 Feb. 2023, https://www.bnnbloomberg.ca/oil-declines-on-u-s-requirement-to-sell-more-crude-from-the-spr-1.1883387
3. “Massive Crude Build Pressures Oil Prices” OilPrice.com, 14 Feb. 2023, https://oilprice.com/Latest-Energy-News/World-News/Massive-Crude-Build-Pressures-Oil-Prices.html
4. “Energy stocks stumble as U.S. crude oil inventories surge higher (NYSEARCA:USO)” Seeking Alpha, 15 Feb. 2023, https://seekingalpha.com/news/3936499-energy-stocks-stumble-as-us-crude-oil-inventories-surge-higher
5. “Crude Falls On Dollar Strength And Surge In EIA Crude Inventories” Barchart, 15 Feb. 2023, https://www.barchart.com/story/news/14237607/crude-falls-on-dollar-strength-and-surge-in-eia-crude-inventories
6. “WTI Oil Price Forecast: Eyeing Potential Bounce Off 50-Day MA” DailyFX, 15 Feb. 2023, https://www.dailyfx.com/news/forex-wti-oil-price-forecast-eyeing-potential-bounce-off-50-day-ma-20230215.html
7. “Crude Inventory 16.28M Barrels vs 1.38M Expected” Forex Factory, 15 Feb. 2023, https://www.forexfactory.com/news/1205830-crude-inventory-1628m-barrels-vs-138m-expected
8. “Oil Slips as US Supply Build Overshadows Stronger China Outlook” Financial Post, 15 Feb. 2023, https://financialpost.com/pmn/business-pmn/oil-extends-drop-on-large-stockpile-build-and-inflation-concerns
9. “WTI Price Analysis: Bulls and bears in battle it out at key support” FXStreet, 15 Feb. 2023, https://www.fxstreet.com/news/wti-price-analysis-bulls-and-bears-in-battle-it-out-at-key-support-202302150018