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Oil futures rose Wednesday, shaking off earlier declines, as official government data showed that U.S. crude inventories climbed for the first time in eight weeks, but gasoline stockpiles posted a modest climb.
The Energy Information Administration report is “less bearish” than the American Petroleum report from Tuesday, Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch. “There is a growing concern that products such as gasoline and distillates are still too far below normal to make us feel comfortable. Refiners are really going to have to kick it up in high gear to meet demand and I think that’s given the oil a bid.”
In Wednesday dealings, November West Texas Intermediate crude
CLX21,
CL.1,
rose 33 cents, or 0.4%, to $75.62 a barrel on the New York Mercantile Exchange, following a modest loss of 0.2% on Tuesday. Prices were trading at $75.08 shortly before the supply data.
November Brent crude
BRNX21,
the global benchmark, tacked on 4 cents, or nearly 0.1%, to $79.13 a barre on the ICE Futures Europe exchange, ahead of its expiration at the end of Thursday’s trading session. The most active December Brent contract
BRNZ21,
rose 11 cents, or 0.1%, to $78.46.
Prices for both WTI and Brent crude settled Monday at highs not seen for a front-month contract since October 2018.
The EIA reported on Wednesday that U.S. crude inventories rose by 4.6 million barrels for the week ended Sept. 24. That defied expectations for an average decline of 4.5 million barrels expected by analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday reported a 4.1 million-barrel increase, according to sources.
The weekly increase for crude inventories reported by the EIA followed seven consecutive weeks of declines.
The numbers show that the impact from storms in the Gulf of Mexico a few weeks ago, which disrupted energy production in the region, are abating, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch.
The EIA also reported weekly inventory increases of 200,000 barrels for gasoline supplies and 400,000 barrels for distillates. The S&P Global Platts survey had forecast a supply increase of 700,000 barrels for gasoline and an inventory decline of 2.2 million barrels for distillates. However, API had reported larger inventory increases of nearly 3.6 million barrels for gasoline and 2.5 million barrels for distillates.
Crude stocks at the Cushing, Okla., storage hub, meanwhile, edged up by 200,000 barrels for the week, and total U.S. petroleum production also rose by 500,000 barrels to 11.1 million barrels per day, the EIA said.
Still, at 418.5 million barrels, U.S. crude oil inventories are about 7% below the five year average for this time of year, according to the EIA.
“The overall fundamentals for oil and products are extremely bullish as supplies of almost everything energy has tight supplies around the globe,” said Flynn, in a daily report. “Demand for products and energy [are] rising as recent lockdowns around the globe due to the delta variant of the COVID-19 plague are being lifted.”
Among the petroleum products, October gasoline
RBV21,
was up 1.1% at $2.227 a gallon and October heating oil
HOV21,
climbed by 1% to $2.311 a gallon. The October contracts expire at the end of Thursday’s session.
November natural gas
NGX21,
traded at $5.614 per million British thermal units, down 4.5%, after settling Tuesday at the highest since February 2014 with supplies in the U.S. tight ahead of the winter heating season.
On average, analysts expect the EIA on Thursday to report that U.S. natural-gas supplies rose by 87 billion cubic feet for the week ended Sept. 24, which would be above the five-year average increase of 72 billion, according S&P Global Platts.
The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, are scheduled to meet on Monday to discuss oil production plans and review the energy outlook.
The group is likely to maintain its current plan to add 400,000 barrels per day to its November output, even as Brent crude prices have recently climbed to highs above $80 a barrel, Reuters reported on Wednesday, citing comments from sources.
In early September, OPEC+ agreed to keep its July deal in place, to raise overall production by 400,000 barrels a day each month from August and eventually erase the output curbs put in place last year to offset weaker demand driven by economic restrictions tied to the pandemic.
