Losses for oil futures worsened Wednesday after U.S. government data revealed hefty weekly increases in domestic supplies of gasoline and distillates, though crude stockpiles posted an unexpected decline.
Petroleum products, especially heating oil, “had an eye opening, much larger build than was expected,” Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch. Also noteworthy, inventories at the U.S. trading hub of Cushing, Okla. “saw a build for the first time in several weeks.”
West Texas Intermediate crude for February delivery CLG20, -0.94% lost 72 cents, or 1.2%, at $57.51 a barrel on the New York Mercantile Exchange, after gaining 0.3% on Tuesday, while March Brent BRNH20, -0.91% shed 90 cents, or 1.4%, at $63.59 a barrel on ICE Futures Europe, following a 0.5% return in the previous session. Both benchmarks were poised to finish at their lowest since early December.
The Energy Information Administration data showed supply increases of 6.7 million barrels for gasoline and 8.2 million barrels for distillates for the week ended Jan. 10. Analysts polled by S&P Global Platts had shown expectations for a smaller climb in supplies of 3.3 million barrels for gasoline and 1.3 million barrels for distillates, which include heating oil.
The build in distillates is “among the highest in history,” and it comes with a weather forecast that is calling for a mild February,” said Phil Flynn, senior market analyst at Price Futures Group.
On Nymex, February gasoline RBG20, -0.91% fell 2.6 cents, or 1.5%, to $1.6287 a gallon and February heating oil HOG20, -1.24% traded at $1.8792 a gallon, down 3.1 cents, or 1.7%.
Patrick DeHaan, head of petroleum analysis at GasBuddy, tweeted Wednesday that total U.S. gasoline stockpiles have never been this high so early in the year (258.3 million barrels), already 3 million barrels ahead of last year and far ahead of the 10-year average of ~239 million barrels for the 2nd week of Jan.”
U.S. crude supplies, however, fell by 2.5 million barrels last week, EIA data showed. The S&P Global Platts survey had called for a rise of 500,000 barrels, while the American Petroleum Institute on Tuesday reported an increase of 1.1 million barrels.
Ahead of a separate EIA update on weekly natural-gas supplies due Thursday, February natural gas NGG20, -2.38% lost 5.6 cents, or 2.6%, to $2.131 per million British thermal units.
Also on Wednesday, the Organization of the Petroleum Exporting Countries released a monthly forecast on the global oil market. The oil cartel increased its 2020 world oil demand growth forecast by 140,000 barrels to 1.22 million barrels a day, while also nudging its global economic growth forecast to 3.1% for the year ahead.
OPEC’s increase “mainly reflect[s] an improved economic outlook for 2020,” the report said, with the developing world—especially China and India—expected to be responsible for most of that growth.
Oil investors have kept one eye on the Sino-American trade agreement, with a signing of a phase-one agreement due shortly. International tensions over trade policy have been one of the biggest headwinds for commodities like crude-oil, which tends to see price gains amid the expectations of healthy economic growth which can foster stronger consumption.
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January 15, 2020 at 09:32PM
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Oil prices fall toward a 6-week low as U.S. gasoline, distillate supplies jump - MarketWatch
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