Oil prices surged on the international market after a study showed a significant decline in US crude investment. Numerous uncertainties influencing the supply and demand sides of the market put pressure on it. According to market statistics, the price of West Texas Intermediate (WTI) crude oil increased at a rate comparable to that of ICE Brent.
WTI prices increased over US$80 per barrel yesterday, according to ING’s statement, as the Energy Information Administration’s (EIA) inventory data revealed a significant drop for goods, boosting expectations for robust gasoline demand ahead of the US driving season.
The present rise is also being supported by Saudi Arabia’s recent decision to raise its official selling price for oil and the agreement by OPEC+ members to prolong the production curbs until mid-year.
The EIA’s weekly US inventory report for the oil market was somewhat bullish, according to analysts noted. US commercial crude oil inventories (excluding SPR) increased by 1.4 million barrels per day (mbpd) for the week ended on 1 March 2024 amid recovering refinery runs.
The market was anticipating an increase of around 1.7 mbpd, while API reported a build of just 0.4 mbpd. ING said when factoring in the SPR, the build was higher, with total US crude oil inventories increasing by around 2.1 mbpd.
Total US commercial crude oil stocks now stand at 448.5 mbpd, around 2% below the five-year average. Meanwhile, oil inventories at Cushing, Oklahoma, increased by 0.7MMbbls to 31.7 mbpd. Crude oil imports from the US increased by 0.84 mbpd to around 7.22 mbpd over the reporting week.
In refined product inventories, stocks of gasoline and distillate fuels decreased more than expected on rising fuel demand as the country heads towards the summer driving season.
Gasoline inventories fell by 4.5 mbpd, against a forecast for a drawdown of 1.1 mbpd. Distillate stockpiles also fell by 4.1 mbpd last week, much higher than the expectation of a decline of just 0.3 mbpd.
Meanwhile, refineries operated at 84.9% of their capacity following the restart of several refineries that completed maintenance, up from 81.5% in the previous week but 1.1% lower than the same period last year. Meanwhile, recent trade numbers from China show that crude oil imports in the country rose 3.3% year on year to 10.74 mbpd over the first two months of 2024.
However, the overall buying trend remains soft as the purchases were lower when compared to imports of 11.39 mbpd in December. China has been slowing its overseas purchases primarily due to slowing demand from refineries, weak economic indicators, and higher inventories.
Data from India’s Petroleum Planning & Analysis Cell show that oil product consumption in February rose 5.7% to 19.7mt. This was led by strong gasoline consumption, which rose 8.9% to 3mt, while distillate demand also rose by 6.2% YoY to 7.4mt in the last month, ING said.
