Crude oil inventories in the United States saw a decrease of 2.3 million barrels during the week ending February 21, according to new data from the U.S. Energy Information Administration released on Wednesday. Crude oil prices were mixed prior to the crude data release by the U.S. Energy Information Administration after the American Petroleum Institute (API) reported on Tuesday a dip of 640,000 barrels in U.S. crude oil inventories. The Brent benchmark was trading slightly down, off 0.05% at $72.98 at 10:24 am, just minutes before release. The WTI benchmark was trading slightly up at +0.03% at $68.95. The dip in crude inventories partially offsets the 4.6 million barrel build that the EIA estimated for the week prior. For total motor gasoline, the EIA estimated that inventories increased by 400,000 barrels for the week to February 21, with production averaging 9.2 million barrels daily. This compares with an inventory slump of 200,000 barrels for the previous week and an average daily production of 9.2 million barrels daily. For middle distillates, the EIA estimated an inventory increase of 3.9 million barrels for last week, with production averaging 5.2 million barrels daily. This compares to an inventory dip of 2.1 million barrels for the week prior, when production stood at an average 4.7 million barrels daily. Distillate inventories are now 8% below the five-year average for this time of year. Total products supplied over the last four weeks decreased to an average 20.3 million barrels per day—a 4.2% increase over this time last year. Distillate products supplied over the last four weeks are up 13.1% compared to this time last year, while gasoline product supplied is off 0.1% from the same period last year.
Crude Futures Drop as Trade Uncertainty Grows
Oil slipped to a new low for the year as US President Donald Trump blitzed markets with a slew of conflicting announcements on trade. West Texas Intermediate retreated to settle further below $69 a barrel at the lowest closing price this year, following a choppy session in which thin volumes amplified swings. Trump on Wednesday made a series of apparently contradictory statements about his plans to impose tariffs on Canada, Mexico and the European Union. The uncertainty over Trump’s actions and the threat of multiple international trade wars have cast a pall over the outlooks for economic growth and energy demand in both the US and China, the world’s two largest consumers of crude. The US diesel market already is also showing signs of demand weakness, with futures for the fuel sinking 1.9% after government data showed inventories swelled the most since early January. “Trump actions are hurting consumer and business confidence, which again will weaken actual consumption,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. Trump on Wednesday first said his planned tariffs on Canada and Mexico would move forward before later saying they would be implemented in early April, about a month later than previously scheduled. The president also said he’d impose 25% duties on the European Union, before shifting to talk about tariffs on automobiles and other topics. The prospect of increased flows also weighed on prices as the White House confirmed plans for Ukrainian President Volodymyr Zelenskiy to visit the US, signaling that Russia’s crude may flow more freely in the near future if a peace deal is reached. At the same time, Iraq reached a pact with the Kurdistan region to resume oil exports.
The trade and supply news overshadowed potentially bullish developments, including:
- Trump’s announcement that he’ll terminate oil concessions the Biden administration gave to Venezuela’s Nicolás Maduro
- Fresh sanctions against Iranian flows
- OPEC+ will again defer a plan to progressively raise output.
Nick Note: Its amazing to me that the market is pricing in will only be a miniscule increase if any of Russian oil supplies to market. Sometime in the future if and when a piece deal is enacted and sanctions are lifted. The market is ignoring the termination of the Venezuelan oil export facility through Citgo. The market is ignoring the fact that America is increasing sanctions on Iranian oil exports. And with Israel is about to go to war with Iran. and 3.8 million barrels of oil per day will be blasted into eternity. And the market is ignoring the fact that OPEC is really unhappy about oil sub $70 a barrel West Texas immediate and they’re going to do something about it.