Oil futures rose Thursday, building on gains scored the previous session after government data showed a much larger-than-expected drops in U.S. crude inventories and production.
Price moves
-
West Texas Intermediate crude for March delivery
CL00,
+0.85% CL.1,
+0.85% CLH24,
+0.85%
rose 90 cents, or 1.2%, to $75.99 a barrel on the New York Mercantile Exchange. -
March Brent crude
BRN00,
+0.74% BRNH24,
+0.77% ,
the global benchmark was up 80 cents, or 1%, at $80.43 a barrel on ICE Futures Europe.
Market drivers
Oil was building on gains scored the previous session after the Energy Information Administration reported a much larger than expected drop in U.S. crude inventories of 9.2 million barrels in the week ended Jan. 19. The agency also reported U.S. crude output dropped back 1 million barrels a day, or mbd, to 12.3 mbd last week, pulling back from record output the previous week.
The production drop was the most “attention-grabbing” part of the weekly data, said analysts at Sevens Report Research. However, a large drop in refinery utilization should have also led to a large drop in refined products barring other developments in physical markets, they said.
Gasoline inventories rose 4.9 million barrels. And gasoline supplied, a measure of demand, dropped 388,000 barrels a day to 7.88 mbd, the analysts noted, a one-year low and well below the fall 2023 peak at 9.5 mbd.
The bottom line, they said, is that “adverse winter weather impacted the oil and refined product markets the most since the Great Texas Freeze sent markets into a frenzy in February 2021.”
Traders need to watch two key factors, they said,
First is how quickly oil production comes back online, “the faster the more bearish for prices,” they said. Second is whether consumer demand for refined product recovers to normal seasonal levels, “and the sooner, the more bullish for prices.”
