Oil prices gain as EIA reports smallest weekly crude supply climb in 5 weeks


Oil futures headed higher on Wednesday, finding support after the Energy Information Administration reported the smallest weekly climb in U.S. crude supplies in five weeks.

Prices also got a boost as a a round of upbeat data on economic activity in China lifted prospects for energy demand.

Price action
  • West Texas Intermediate crude for April delivery


    rose 23 cents, or 0.3%, to $77.28 a barrel on the New York Mercantile Exchange. Prices were trading lower at $76.67 before the EIA supply data.

  • May Brent crude

    the global benchmark, was up 35 cents, or 0.4%, to $83.80 a barrel on ICE Futures Europe.

  • Back on Nymex, April gasoline
    added 0.8% to $2.663 a gallon, while April heating oil
    rose 1.6% to $2.851 a gallon.

  • Natural gas for April delivery
    declined 0.4% to $2.738 per million British thermal units.

Market drivers

The Energy Information Administration on Wednesday reported that U.S. crude inventories edged up by 1.2 million barrels for the week ended Feb. 24.

That marked a 10th straight weekly increase for crude supplies reported by the EIA, but the smallest weekly rise since the week ended Jan. 20.

On average, analysts forecasted a climb of 350,000 barrels, according to a poll conducted by S&P Global Commodity Insights. The American Petroleum Institute late Tuesday reported a much larger 6.2 million barrel increase in U.S. crude supplies last week, according to a source citing the figures.

The supply figures were not as bearish as the API data released Tuesday, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch. Crude spiked higher but may still get “dragged into the risk-off sentiment,” with benchmark U.S. stock market indexes moving lower in Wednesday dealings.

The EIA report also showed a weekly inventory decline of 900,000 barrels for gasoline, while distillate supplies rose by 200,000 barrels. The analyst survey had forecast inventory declines of 300,000 barrels for gasoline and 700,000 barrels for distillates.

Crude stocks at the Cushing, Okla., Nymex delivery hub climbed by 300,000 barrels for the week, the EIA said.

The EIA data included an upward “adjustment” to crude stocks of 2.266 million barrels per day for the week ended Feb. 24. That followed a 2.073 million-barrel upward adjustment the week before.

Phil Flynn, senior market analyst at The Price Futures Group, pointed out to MarketWatch that there have been more than 45 million barrels of “adjustments” in three weeks.

Read: What are these EIA ‘adjustments’ in the weekly U.S. oil supply data tables all about?

Other market drivers

Economic data from China, meanwhile, was upbeat, raising the potential for higher energy demand.

China’s official manufacturing purchasing managers index rose to 52.6 in February from January’s 50.1, according to the National Bureau of Statistics. The result topped the 50.5 expected by economists polled by The Wall Street Journal.

The official nonmanufacturing PMI, which covers both service and construction activity in the country, increased to 56.3 in February, compared with 54.4 in January, said the statistics bureau.

Meanwhile, Russia was set to cut crude production in March and limit exports in response to new rounds of price caps and sanctions imposed by Western nations after its invasion of Ukraine just over a year ago.

Crude prices fell in February, with pressure tied in part to shifting market expectations for Federal Reserve interest rate rises as the central bank struggles to bring down inflation. Expectations for higher rates boosted Treasury yields and lifted the U.S. dollar. A stronger dollar can be a weight on commodities priced in the currency, making it more expensive to users of other currencies.

“Oil prices are trading near the lower end of its two-week range despite increasing war risks and Russia’s plan to cut production levels beginning this month. Rising yields and a strong dollar will likely continue to lean on oil prices with spot poised to weaken further,” said Peter Cardillo, chief market economist at Spartan Capital, in a note. “We continue to look for spot oil to trade below the $70 area in the near future,” he said.




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