Wednesday, February 8, 2023
HomeMarketOil extends gains after drop in U.S. crude inventories

Oil extends gains after drop in U.S. crude inventories

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Oil futures rose Thursday, building on gains seen after data showed a large drop in U.S. crude inventories as a major winter storm was set to bring below-normal temperatures to a large part of the country.

Price action
  • West Texas Intermediate crude for February delivery
    rose $1.45, or 1.9%, to $79.74 a barrel on the New York Mercantile Exchange.

  • February Brent crude
    the global benchmark, was up $1.57, or 1.9%, at $83.79 a barrel on ICE Futures Europe. March Brent
    the most actively traded contract, was up $1.53, or 1.9%, at $83.73 a barrel.

  • Back on Nymex, January gasoline
    rose 1.2% to $2.284 a gallon, while January heating oil
    was up 1% at $3.16 a gallon.

  • January natural gas
    rose 1.7% to $5.421 per million British thermal units after eking out a gain in Wednesday’s session. The modest bounce followed a three-day drop that saw a drop of nearly 25%.

Market drivers

Oil futures were adding to gains seen after the Energy Information Administration on Wednesday reported a 5.9 million barrel drop in U.S. crude inventories in the week ended Dec. 16. The EIA said gasoline stocks rose 2.5 million barrels, while distillate supplies fell by around 200,000 barrels.

Analysts surveyed by S&P Global Commodity Insights had expected crude inventories to show a rise of 600,000 barrels, while gasoline stocks were seen rising 1.6 million barrels and distillate supplies falling 400,000 barrels.

Crude rallied nearly 3% after the data Wednesday, and gains may have been even more pronounced if not for fears that a winter storm could curtail holiday travel, said Charalampos Pissouros, senior investment analyst at XM, in a note.

Meanwhile, investors continue to assess the implications of China’s relaxation of COVID curbs.

“After hitting a nearly one-year low on December 9, oil prices entered a recovery mode, printing a higher low this week, perhaps helped by hopes that China would ease its COVID-related restrictions, Nonetheless, a discussion of a full-scale bullish reversal appears premature for now as it may take some time for China’s economic engines to restart and revive crude demand,” Pissouros wrote.

Forecasters predicted heavy snow, ice, flooding and even tornadoes from Thursday to Saturday in a swath of the country, from the Plains and Midwest to the East Coast, followed by a surge of cold air. The Christmas weekend could be the coldest in decades.

The EIA is scheduled to release weekly data on natural-gas storage Thursday morning. The agency is expected to report a 94-billion cubic feet (bcf) withdrawal from storage for the week ended Dec. 16, according to a survey of analysts by S&P Global Commodity Insights.

—The Associated Press contributed to this article.


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