COM - Crude oil turns lower after huge U.S. crude inventory build
2024-02-14 17:45:19 ET
- U.S. crude oil prices closed lower Wednesday after seven straight daily gains, under pressure after U.S. data showed a sharp increase in crude inventories, exacerbated as refineries reduced their capacity use.
- The U.S. Energy Information Administration reported domestic commercial crude inventories jumped by 12M barrels for the week ended February 9, far exceeding expectations, as oil refinery runs were down 297K bbl/day from the previous week and refinery utilization rates plunged by 1.8 percentage points to just 80.6% of total capacity.
- BP's 440K bbl/day Whiting refinery in Indiana reportedly was shut down earlier this month following a power outage, and there was " no doubt " the down refinery, as well as seasonal refinery maintenance, caused part of the "impressive increase in weekly crude supplies," Price Futures Group analyst Phil Flynn said, according to MarketWatch ."
- The low refinery utilization rate is " a pseudo disaster , down four to five weeks in a row at the end of winter," Mizuho's Bob Yawger said, adding that refiners have kept activity slow even after emerging from last month's freezing weather that hampered operations.
- Front-month Nymex crude ( CL1:COM ) for March delivery ended -1.6% to $76.64/bbl, snapping a seven-session winning streak, while front-month April Brent crude ( CO1:COM ) closed -1.4% to $81.60/bbl.
- ETFs: ( NYSEARCA: USO ), ( BNO ), ( UCO ), ( SCO ), ( USL ), ( DBO ), ( DRIP ), ( GUSH ), ( NRGU ), ( USOI )
- Brent prices should be above $90/bbl, given how little oil inventories grew last month, according to analysts at Standard Chartered.
- "We still do not think crude oil prices fully reflect the rapid tightening of the market or the recent escalation of geopolitical risk," Standard Chartered's head of commodities research Paul Horsnell said in a new report.
- Morgan Stanley recently raised its oil price forecasts amid surprisingly tight conditions, and J.P. Morgan has predicted oil will climb another $10/bbl by May.