US Crude Rises 1%, Flirts with $63 Despite Surprise Supply Boost

Crude oil futures are rising despite the US government reporting an unexpected increase in domestic supplies. US crude prices have been soaring this month, climbing nearly 20% and flirting with $63 per barrel. In the near- and medium-term, investors will be concentrating on the Organization of the Petroleum Exporting Countries (OPEC) and the fallout from the blast of wintry weather in Texas a week ago. Could oil prices meet Goldman Sachs’ forecast of $75 this year?

March West Texas Intermediate (WTI) crude oil futures advanced $1.04, or 1.69%, to $62.72 per barrel at 14:41 GMT on Wednesday on the New York Mercantile Exchange. US crude is already poised for a weekly gain of nearly 2%, bringing its year-to-date rally to 30%.

Brent, the international benchmark for oil prices, is also trading at its best level in more than a year. April Brent futures surged $1.18, or 1.85%, to $65.67 per barrel on London’s ICE Futures exchange.

According to the US Energy Information Administration (EIA), domestic crude inventories rose 1.285 million barrels in the week ending February 19. This is much higher than the median estimate of a decline of 5.19 million barrels.

Stockpiles at the Cushing, Oklahoma storage facility surged 2.807 million barrels. Distillate inventories plunged 4.969 million barrels, while gasoline supplies added just 12,000 barrels.

It should also be noted that the EIA found that gasoline production contracted 1.295 million, and distillate fuel output dropped 953,000 barrels.

Following this week’s supply report, all eyes will be focused on next week’s OPEC+ meeting. With global crude prices hitting their best levels in more than a year, discussions could be tense. Saudi Arabia could maintain a more cautious approach to normalization, while Russia might want to turn on the taps and take advantage of higher prices. The other factor the oil cartel may need to consider is America’s oil output as crude activity continues to rebound.

In the aftermath of the devastating winter storm, it is being reported that traffic at the Houston ship channel is slowly coming back online, with only some terminals facing issues from last week’s deep freeze in Texas.

A rising greenback capped crude’s gains. The US Dollar Index (DXY) rose 0.17% to 90.32, from an opening of 90.17. A stronger buck is bad for dollar-pegged commodities because it makes it more expensive for foreign investors to purchase.

In other energy commodities, March natural gas futures tumbled $0.023, or 0.8%, to $2.856 per million British thermal units (btu). March gasoline futures added $0.0212, or 1.09%, to $1.9637 per gallon. March heating oil futures picked up $0.0214, or 1.15%, to $1.8823 a gallon.

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