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Oil prices give up gains after EIA data

2024-04-04

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On Wednesday (April 3), WTI crude oil futures pared some gains and traded just below $86 a barrel after the latest EIA data showed that U.S. crude oil inventories unexpectedly increased by 3.21 million barrels instead of an expected decrease of 1.511 million barrels. .

EIA Oil Status Report data shows that U.S. crude oil inventories increased by 3.21 million barrels in the week ended March 29, 2024, which was lower than market expectations for a decrease of 1.511 million barrels.

On the other hand, crude oil inventories at the Cushing, Oklahoma, delivery center fell by 377,000 barrels, after falling by 2.107 million barrels previously.

In addition, gasoline inventories fell by 4.256 million barrels, exceeding expectations for a decrease of 820,000 barrels; distillate inventories, including diesel and heating oil, fell by 1.268 million barrels, while the market consensus was for a decrease of 6.004 million barrels.

This contrasts with Tuesday's API data, which showed a decrease of 2.2 million barrels.

Still, inventories at the Cushing, Oklahoma, delivery center fell, with gasoline and distillate inventories also falling more than expected.

In terms of geopolitical risks, Ukrainian drones launched a new round of attacks on Russian oil refineries on Tuesday, which may paralyze more of the country's processing capacity and lead to higher prices.

Meanwhile, concerns have escalated that a wider conflict in the Middle East could disrupt oil supplies after Iran vowed to retaliate against Israel for an attack that killed a senior military personnel on Monday.

In terms of production cuts, OPEC+ members agreed last month to extend voluntary production cuts of 2.2 million barrels per day until the end of June to support the market.

Oil prices had previously reached their highest level in more than five months after OPEC+ members decided to extend voluntary production cuts of 2.2 million barrels per day until June to stabilize the market.

Ole Hansen at Saxo Bank said: "OPEC+'s decision to keep the agreement to cut oil supply unchanged in the first half of this year will keep global markets tight and likely to push prices higher."

Giovanni Staunovo of UBS said in a report: A renewed focus on production cuts could leave the oil market undersupplied, especially if oil demand continues to be strong this year. Production cuts are expected to be reversed starting in June, but only gradually if oil inventories continue to fall. OPEC would not lift production cuts if it did not believe the oil market could absorb more crude.

Bank of America Global Research raised its 2024 Brent and WTI crude oil price forecasts to $86 and $81 a barrel, respectively, on firming demand and rising political tensions, the bank said in a note on Wednesday. "Low inventories across the oil complex, OPEC+ production cuts, geopolitical tensions and strong economic growth data have reversed price trends and now point to a tighter than expected summer driving season, supporting crude and product prices," the report said. Firm backwardation.”

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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