Oil futures: Crude benchmarks in retreat as inventory builds knock sentiment

9 Feb 2023

Quantum Commodity Intelligence -  Crude oil futures pulled back from February highs earlier Thursday, as markets wobbled amid concerns over growing inventories in both the US and Europe, although Brent prices were still up around 5% on the week.

April ICE Brent futures were trading at $84.08/b (1755 GMT) compared to the day's range of $83.05-$85.50/b and Wednesday's settle of $85.09/b.

At the same time, Mar23 NYMEX WTI was trading $77.44/b versus Wednesday's settle of $78.47/b.  

"Crude prices are higher (this week) on optimism the global economic outlook won't get crushed from over-tightening by central banks," said Ed Moya, senior market analyst at brokerage Oanda.

​However, weekly data from the Energy Information Administration (EIA) showed US crude stocks continued to rise last week, posting a small gain for a fifth consecutive week.

"Oil didn't get any favors from the EIA crude oil inventory report that showed a modest build and as production rose to the highest levels since April 2020," added Moya.

US crude oil output crept higher for the first time in five weeks, rising 100,000 bpd to 12.3 million bpd, which is its highest total since the height of the 2020 pandemic.

In refined products, US gasoline inventories reached a fresh 11-month high last week as imports hit 1mn bpd and refinery runs topped 15mn bpd for the first time this year.

Gasoline inventories jumped 5mn barrels or 2.1% to 239.6 million barrels in the week to 3 February, recording its biggest weekly build in two months.

US distillate stocks rose for a second straight week to the highest in a year, measured at 120.5 million barrels by the EIA.

Sentiment was further knocked after gasoil stocks held in the ARA region increased over 7% last week to their highest since March 2021, as restocking picked up pace on plentiful prompt supply.

Gasoil/diesel held in the Amsterdam-Rotterdam-Antwerp (ARA) blending and trading hub reached 2.49 million tonnes this week, according to brokers citing Insights Global data, over 50% more than a year ago and 7% above its five-year average for the week.

Prices were lifted this week after crude exports from the key export hub of Ceyhan were suspended following two devastating earthquakes in Turkey, while BP Azerbaijan declared force majeure on loadings from the Mediterranean port.