Oil futures: Crude prices up 2.5% as EIA, API report lower US stockpiles
Quantum Commodity Intelligence – Crude oil futures Wednesday were higher following the release of two bullish US inventory reports, although competing price signals continued to keep benchmarks largely locked within the tight range seen so far this month.
Front-month May24 ICE Brent futures were trading at $83.88/b (1750 GMT), compared to Tuesday’s settle of $81.92/b and moving back towards the top end of the March trading band.
At the same time Apr24 NYMEX WTI was trading at $79.52/b, versus Tuesday’s settle of $77.56/b.
Markets found support early in the session after the American Petroleum Institute reported a drop of 5.5 million barrels in US crude stocks last week, coming in well under forecasts for a modest increase.
Gasoline stockpiles also dropped 3.75 million barrels, while distillates fell by more than 1 million barrels, according to the API industry body, adding to an overall draw of more than 10 million barrels.
The EIA later reported a more modest crude draw of 1.5 million barrels, which defied forecasts for a 1 million barrel build, while the government agency had gasoline stockpiles slumping more than 5.5 million barrels.
Prices were also buoyed after OPEC stuck to its guns in predicting oil demand would increase 2.2 million bpd this year and another 1.8 million bpd in 2025, while the IEA is set to counter with its own report on Thursday, although its 2024 outlook is expected to be in the region of 1 million bpd below OPEC’s upbeat outlook.
Additionally, the latest round of drone strikes aimed at Russian refineries helped to underpin products markets.
Compliance
However, OPEC+ faces a separate problem on the compliance front, after missing its overall production target in the first two months of the year.
Iraq has been the primary quota buster, although concerns have been flagged over Russia potentially nudging up crude exports, which could be linked to ongoing military strikes against its refining infrastructure.
“Russia seems deviating from its commitment to reduce exports as tanker tracking data suggest weekly exports climbing to 3.7 million bpd. Russian oil shipments are tracking above its pledge," noted ANZ commodity strategist Daniel Hynes.
Tuesday’s US inflation report came in slightly higher than expected, as the February CPI climbed 0.4% on the month and 3.2% year over year, although analysts are still banking on a summer interest rate cut.
“The February consumer price data came in a touch stronger than expected. The headline CPI increased 0.4% in the month, led by higher gasoline prices (+3.8%). Excluding food and energy prices, core inflation also registered 0.4%,” said Wells Fargo in its latest investor note.
“In our view, the details of the CPI report generally were encouraging. We expect core goods deflation to return in the coming months amid improved supply chains and less supportive seasonal factors.”
