Oil futures rose modestly early Wednesday as traders weighed U.S. production and inventory data while continuing to play down the prospect of supply disruptions in the Middle East.
Price moves
-
West Texas Intermediate crude for March delivery
CL00,
+0.82% CL.1,
+0.82% CLH24,
+0.82%
rose 57 cents, or 0.8%, to $73.88 a barrel on the New York Mercantile Exchange. -
April Brent crude
BRN00,
+0.74% BRNJ24,
+0.74% ,
the global benchmark, was up 61 cents, or 0.8%, at $79.20 a barrel on ICE Futures Europe.
Market drivers
Oil prices have remained largely rangebound, failing to build a significant risk premium despite conflict in the Middle East that has escalated beyond the Israel-Hamas war.
Market participants “appear to be assuming that we will not see a significant escalation in the Middle East, at least an escalation which puts oil supply at risk,” Warren Patterson and Ewa Manthey, commodity strategists at ING, said in a note.
“It’s important to remember that while we are seeing disruptions to trade flows as a result of Red Sea developments, oil production remains unchanged as a result. Furthermore, the oil balance is comfortable through 1H24, while OPEC is sitting on a little more than 5 million barrels a day of spare capacity, of which more than 3 million barrels a day sits in Saudi Arabia,” they wrote.
Meanwhile, a monthly report from the Energy Information Administration on Tuesday forecast U.S. crude oil output to will grow by around 170,000 barrels a day in 2024 to average 13.1 million barrels a day, or mbd. This is slightly lower than the 13.21 mbd the EIA was forecasting last month, the ING strategists noted.
U.S. crude supply grew a little more than 1 mbd last year, while a drop in the growth rate shouldn’t be a surprise amid a slowdown in drilling activity seen over much of last year, they said.
The American Petroleum Institute late Tuesday said U.S. crude inventories rose 674,000 barrels last week, according to a source citing the data, while gasoline stocks rose 3.7 million barrels and distillate supplies declined by 3.7 million barrels.
Official figures from the EIA are due Wednesday morning. On average, analysts polled by S&P Global Commodity Insights expect the data to show a climb of 600,000 barrels in commercial, domestic crude supplies for the week ended Feb. 2. They also forecast an inventory rise of 300,000 barrels for gasoline, and a decline of 2.4 million barrels in distillate stockpiles.
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