Oil futures ended slightly lower Wednesday after a rise in U.S. crude inventories as traders awaited OPEC+’s response to a coordinated release of strategic reserves by several countries.
West Texas Intermediate crude for January delivery
settled 11 cents lower, down 0.1%, at $78.39 a barrel on the New York Mercantile Exchange. January Brent crude
the global benchmark, shed 6 cents, or 0.1%, to end at $82.25 a barrel on ICE Futures Europe.
The U.S. Energy Information Administration said crude inventories rose 1 million barrels in the week ended Nov. 19, while gasoline stocks fell 600,000 barrels and distillates rose 2 million barrels.
Analysts surveyed by S&P Global Platts, on average, had looked for crude inventories to fall by 1.3 million barrels, while gasoline stocks were seen unchanged and distillates had been expected to fall by 900,000 barrels.
The American Petroleum Institute, a trade group, late Tuesday said oil stocks rose 2.3 million barrels last week, while gasoline supplies rose 600,000 barrels and distillate supplies fell 1.5 million barrels, according to Dow Jones Newswires.
WTI and Brent both put in strong gains Tuesday, after the Biden administration announced it would release 50 million barrels of crude from the Strategic Petroleum Reserve in an effort joined by China, India, Japan, South Korea and the U.K. to push down soaring energy prices.
“Yesterday’s price response can be explained by the fact that this step had been anticipated for days, a sword of Damocles that had caused oil prices to fall sharply beforehand,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
The Organization of the Petroleum Exporting Countries and its allies — or OPEC+ — is due to meet next week. OPEC+ had rebuffed calls by the Biden administration and others to speed up production increases. OPEC+ has boosted output in monthly increments of 400,000 barrels a day as it unwinds earlier production cuts.
Now, traders wonder if OPEC+ will scrap planned increases in response to the release of strategic reserves.
It is unclear, however, whether the U.S. will place the entire 50 million barrels on the market since, under the swap arrangement being used, it must first be taken by private oil companies and then returned, with interest, at a later date, Fritsch said. “If there is no acute supply shortage, the companies in question are hardly likely to take advantage of this option unless they are given some additional incentive. It is perfectly conceivable therefore that the targeted figure of 50 million barrels will not nearly be used up in its entirety,” he said.
“Given the API data, the risks are for this expected [draw] in inventories to not be met and we may even see a small build in crude inventories,” said Chris Weston, head of research at Pepperstone. “Still, we’re not seeing any real worry in the crude price from the API data here. A build in inventories of over 3 million barrels would be a risk for crude longs.”
U.S. markets are closed Thursday for the Thanksgiving Day holiday. That means traders saw a raft of data earlier than usual, including the EIA’s weekly natural-gas report, which showed a 21 billion cubic foot withdrawal last week. Analysts surveyed by S&P Global Platts were looking for a 23 billion cubic foot withdrawal.
January natural-gas futures
rose 10.10 cents, or 2%, to close at $5.0680 per million British thermal units.
Weekly data from Baker Hughes, which is usually released on Friday, showed the number of U.S. oil rigs rose by 6 to 467.