Crude prices ease after US stockpiles report

Oil prices edged lower on Thursday after a big increase in US crude inventories but continued to trade in a narrow range as hopes for a recovery in Chinese demand remained in focus.

Brent crude futures fell 36c to $85.02 a barrel by 10.42am GMT and West Texas Intermediate was down 29c at $78.30.

Prices were pressured by last week’s bigger-than-expected build in US crude oil stocks, which rose to the highest level since June 2021, the Energy Information Administration (EIA) said on Wednesday.

The increase was largely because of a data adjustment, which analysts said muted the impact on oil prices.

“Brent failed again to move above the 100-day moving average this week. Together with a large crude build in the US, prices remain under downward pressure,” said UBS analyst Giovanni Staunovo.

The Brent benchmark has been swinging within an $80-$90 a barrel range for the past six weeks, while WTI has ranged between $72 and $83 since December.

“Oil prices are very choppy at the moment, with traders having a lot to take in,” Oanda analyst Craig Erlam said in a note, pointing to Russia’s cutting of output by 500,000 barrels a day in March, a strong Chinese economic recovery and an uncertain global economic outlook.

China will account for almost half of global oil demand growth this year after relaxing its Covid-19 curbs, the International Energy Agency (IEA) said on Wednesday.

On the supply side, the market is keeping a close eye on Russian oil production.

“It is open for interpretation how the country’s oil production will be affected by international sanctions or to what extent the invader would go to use oil as leverage,” said Tamas Varga of oil broker PVM.

Russian oil exports were just down just 160,000 bbl/day from levels before the war in Ukraine, but about 1-million bbl/day production will be shut in by the end of the first quarter, the IEA said.

The market will look for economic clues from a host of Fed and ECB officials due to speak later on Thursday.

Reuters