Oil down on build in US crude inventories
LONDON, February 24, 2021 – Oil was down Wednesday morning in Asia, with investors digesting an unexpected build in US crude inventories. The build was attributable to the unprecedented cold snap that hit Texas and surrounding areas during the previous week curbing fuel demand from refineries that were forced to shut down.
Brent oil futures rose 3.46% to $28.09 by 11:26 PM ET (4:26 AM GMT) and WTI futures jumped 3.92% to $24.95. However, both Brent and WTI futures remained above the $60 mark.
US crude oil supply data from the American Petroleum Institute (API) showed a build of 1.026 million barrels for the week ending Feb. 19. Forecasts prepared by Investing.com had predicted a 5.372-million-barrel draw, and API recorded a 5.8-million-barrel draw the week before.
Investors now await crude oil supply data from the US Energy Information Administration, due later in the day.
“The key question is how quickly does US oil supply recover. It looks like supply will recover faster than refineries, and supply is going to outpace demand in the next few weeks. That will give negative weight to the market,” Commonwealth Bank analyst Vivek Dhar told Reuters.
Wednesday’s downward trend sees the black liquid press pause on a recent rally of more than 26% to 13-month highs for both Brent and WTI futures since the start of 2021.
Also giving prices a boost was the supply disruption in the US and the supply discipline maintained by the Organization of the Petroleum Exporting Countries and allies, or OPEC+. Saudi Arabia also took the lead by implementing an extra one-million-barrels-per-day cut earlier in 2021.
Losses were capped, however, by global stimulus packages to bolster economic growth, increasing investor appetite for commodities and continued hopes that the Covid-19 vaccines rollout will lead to eased lockdown restrictions globally.
First published on Investing.com