EIA crude oil inventories rose for the first time in eight weeks

Data released by the U.S. Energy Information Administration (EIA) showed that commercial crude oil inventories excluding strategic reserves increased by 515,000 barrels to 413.8 million barrels in the week ended January 14, gasoline inventories increased by 5.873 million barrels, and refined oil inventories decreased by 1.431 million barrels. The four-week average supply of U.S. crude products was 21.157 million bpd, an 11.9% increase from a year earlier and higher than pre-pandemic levels. U.S. Strategic Petroleum Reserve (SPR) inventories fell by 1.348 million barrels to 592 million barrels last week, the lowest since the week of November 15, 2002.

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Tortoise's portfolio manager Quinn Kiley said that in the short term we may see some price shocks, but by the second half of this year or early 2023, we will see supply keep pace with demand growth and the market will reach a more balanced state of supply and demand. Ole Hansen, head of commodity strategy at Saxo Bank, also said that, as confirmed by the International Energy Agency in its monthly report, the underlying fundamentals remain strong, but technical indicators are signaling overbought, and oil prices may soon fall into a period of consolidation.

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Phil Flynn, senior analyst at PriceFuturesGroup, said: "I don't think the increase in gasoline supply is a bull killer. We will need refiners to continue refining to meet gasoline demand during the summer driving season - which is why the market is still supported despite the increase in gasoline supply. 1. Despite a mixed outlook for overall inventory data, U.S. demand remains strong. Total refined oil supply is at its highest level for this period in at least 30 years.”

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For the rising oil prices, US President Biden said that efforts are being made to increase oil supply. White House economic adviser Brian Deese said that the United States will work to speed up the release of oil from the strategic reserve. Still, investors see Biden's options to curb the rise in oil prices as limited and likely unsustainable. The recent surge in crude oil prices poses a challenge to consumer countries and central banks as they try to curb inflation while supporting economic growth.

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The supply-side topic is now receiving more attention as strong oil demand is widely expected this year. OPEC+ output fell 800,000 barrels per day (bpd) below its target in December, the International Energy Agency (IEA) said on Wednesday, while recent disruptions to the Iraq-Turkey pipeline and attacks on infrastructure in the United Arab Emirates underscored the risk of continued output shortfalls.

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At the same time, there is uncertainty about what sanctions Russia may face over its invasion of Ukraine, and whether this will affect its oil exports. For now, geopolitics, supply concerns and expectations of continued strong demand are likely to support oil prices, with analysts still forecasting $100 a barrel this year.