Oil futures settled lower on Wednesday, under pressure after data from the U.S. government showed a weekly rise in U.S. crude inventories for the first time in four weeks.
Weakness in the U.S. dollar following the April reading of the consumer-price index offered little support to dollar-denominated oil prices.
Price action
-
West Texas Intermediate crude for June delivery
CL00,
-1.10% CL.1,
-1.10% CLM23,
-1.10%
fell $1.15, or 1.6%, to settle at $72.56 a barrel on the New York Mercantile Exchange. -
July Brent crude
BRN00,
BRNN23,
,
the global benchmark, lost $1.03, or 1.3%, at $76.41 a barrel on ICE Futures Europe. -
Back on Nymex, June gasoline
RBM23,
-1.13%
rose 0.6% to $2.49 a gallon, while June heating oil
HOM23,
-2.03%
added 0.1% at $2.39 a gallon. -
June natural gas
NGM23,
+4.02%
dropped nearly 3.4% to $2.19 per million British thermal units.
Supplies
On Wednesday, the Energy Information Administration reported the first weekly increase in crude supplies in four weeks.
U.S. commercial crude inventories rose by 3 million barrels for the week ending May 5. On average, analysts forecast a decline of 1.8 million barrels, according to a survey by S&P Global Commodity Insights.
The EIA’s data showed “crude exports have slowed amid Brent’s narrowing [price] premium to WTI, allowing for the entirety of the near 3 million barrels released from the [Strategic Petroleum Reserve] to accumulate into commercial stocks last week,” Troy Vincent, senior market analyst at DTN, told MarketWatch.
Product stocks, meanwhile, saw sizeable declines from “strengthening domestic demand and product net exports jumping 8.5% on the week” to over 4.3 million barrels per day, while domestic refining remains restrained, he said.
Still, “the anticipation of rising refinery run rates in the coming weeks, and therefore higher domestic output of diesel and gasoline, is likely to continue to help offset the perceived bullishness” of the EIA’s reported draws to fuel stocks, Vincent said.
The EIA report showed weekly inventory declines of 3.2 million barrels for gasoline and 4.2 million barrels for distillates. The analyst survey had forecast supply declines of 550,000 barrels for gasoline and 1.1 million barrels for distillates.
Crude stocks at the Cushing, Okla., Nymex delivery hub edged up by 400,000 barrels for the week, the EIA said, while oil supplies in the SPR rose 2.9 million barrels.
Other market drivers
Wednesday’s U.S. inflation data, which came in line with expectations, has “weighed on the dollar, but not enough to boost to oil prices,” Vincent said. The ICE U.S. Dollar index
DXY,
fell 0.2% to 101.46 in Wednesday dealings.
U.S. consumer prices rose 0.4 % in April, the Labor Department said Wednesday. That matched the increase expected by economists polled by the Wall Street Journal.
Over the past 12 months, consumer inflation increased 4.9%, down from a 5% year-on-year increase in March.
Crude found support Tuesday, erasing early losses, after reports that the Biden administration planned to buy back oil for the U.S. Strategic Petroleum Reserve as soon as maintenance and repair work on the reserve was completed.
U.S. oil prices dropped by just over 7% last week, driven by worries over the economic outlook.
Crude bounced this week, but “has proven to be a lightning rod for volatility of late and as such, further extreme price oscillations cannot be ruled out,” said Tim Waterer, chief market analyst at KCM Trade. “Particularly as the oil price is so sensitive to global growth expectations.”
Read the full article here
