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Futures Movers: Oil prices end higher as EIA reports declines in U.S. crude and gasoline supplies

Oil futures ended higher on Wednesday, but with U.S. benchmark prices holding below $90 a barrel, after U.S. government data revealed weekly declines in crude and gasoline supplies.

Traders also monitored developments on the potential return of Iran to an international nuclear accord, and kept an eye on the threat of a Russian invasion of Ukraine.

Price action

West Texas Intermediate crude for March delivery CL.1, +0.68% CLH22, +0.68% CL00, +0.68% rose 30 cents, or 0.3%, to settle at $89.66 a barrel on the New York Mercantile Exchange after an intraday high at $90.58.
April Brent crude BRN00, +0.19% BRNJ22, +0.19%, the global benchmark, added 77 cents, or 0.9%, to $91.55 a barrel on ICE Futures Europe.
March natural-gas futures NGH22, -6.00% fell 5.6% to $4.009 per million British thermal units. Read a related story
March gasoline RBH22, +1.27% rose 1.1% to $2.653 a gallon. March heating oil HOH22, +1.43% added 1.2% at $2.824 a gallon.

Supply data

The Energy Information Administration reported on Wednesday that U.S. crude inventories fell by 4.8 million barrels for the week ended Feb. 4.

On average, analysts had forecast an increase of 100,000 barrels, according to a poll conducted by S&P Global Platts. The American Petroleum Institute reported late Tuesday that U.S. crude supplies fell by 2 million barrels.

The EIA also reported weekly inventory declines of 1.6 million barrels for gasoline and 900,000 barrels for distillates. The S&P Global Platts survey expected a supply climb of 1.4 million barrels for gasoline, but an inventory decline of 600,000 barrels for distillates.

The EIA data showed crude stocks at the Cushing, Okla., Nymex delivery hub fell by 2.8 million barrels for the week. Total domestic petroleum production rose 100,000 barrels to 11.6 million barrels per day.

The EIA report suggests U.S. crude production and refining was unaffected by the cold temperatures that hit Texas and Midwest, Troy Vincent, senior market analyst at DTN, told MarketWatch. The largest contributor to the fall in crude inventories was weekly net imports of crude “narrowing by over 1.4 million [barrels per day], reflecting both declining imports and surging exports.”

Iran and Ukraine

The U.S. is participating indirectly in international talks in Vienna aimed at restoring the Iran nuclear accord. The Trump administration pulled the U.S. out of the agreement in 2018, renewing sanctions on Tehran that sharply curtailed the major oil producer’s crude exports. Iran has subsequently breached major parts of the agreement. U.S. and Iranian officials on Tuesday said a deal could be within reach, though the prospect of an agreement is stirring debate in Washington.

Lifting sanctions could see Iran unleash 1 million barrels a day or more of crude and condensate production within four to six months, according to analysts at Rystad Energy.

The only risk factors for oil are “the possibility of a resumption of Iranian exports or Russia pulling back from the border with Ukraine,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.

There is a lot of talk about steps to try to slow surging oil and gasoline prices, but “this is going to be a tall order because demand around the globe seems to be absolutely exploding and it’s hard to see anywhere where supply can keep up,” he said.

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