Oil Prices Pullback After Bearish EIA Inventory Report
Oil prices are little changed Thursday following a bearish report released by the US Energy Information Administration (EIA) inventory which weighed on the OPEC+ supply cut expectations.
Fuelling a bearish outlook, the latest estimates from China National Petroleum Corporation (CNPC) show that the oil demand growth in the country could slow down significantly in 2024.
Market analysts relate the development to a lack of post-pandemic recovery and increasing dependency towards new energy vehicles that would increase fuel switching.
The corporation now expects Chinese oil demand to grow by a modest 1% to 764mt (around 15.3MMbbls/d), the lowest demand growth forecast in at least a decade excluding the COVID-19-affected period.
Crude oil prices slipped after higher US crude inventories indicated that the market may not be as tight as initially thought, ANZ Bank said in a Thursday note.
Brent crude was down 0.5% to US$83.29 per barrel and West Texas Intermediate crude lost 0.2% to US$78.35/b at last look early Thursday. Signs that US interest rates could remain elevated also weighed on sentiment, Reuters said in a Thursday report.
The US Energy Information Administration reported that crude oil inventories rose 4.2 million barrels last week. This was smaller than an 8.4-million-barrel build projected by another industry report, but still tempered optimism about tighter supplies, the bank noted.
However, gains were limited by expectations that OPEC and its allies will extend the current supply agreement into the second quarter, according to a Bloomberg survey.
Both Brent and WTI continue to trade in a narrow range this morning as another week of inventory build in the US outweighed the strength in the time spreads and expectations of supply cut extension by the OPEC+.
The market was anticipating an increase of around 2.6MMbbls, while the American Petroleum Institute (API) reported a build of 8.43MMbbls. This was the fifth consecutive week of additions, with US oil inventories reaching the highest levels since November as refinery runs are still seasonally the lowest since 2021.
When factoring in the SPR, the build was even higher, with total US crude oil inventories increasing by around 4.9MMbbls, ING commodities strategists said in a note today. Total US commercial crude oil stocks now stand at 447.2MMbbls, still around 1% below the five-year average. #Oil Prices Pullback After Bearish EIA Inventory Report
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