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What’s happening: Crude oil recorded losses on Wednesday, following the release of crude supply data from the US.
What happened: The Energy Information Administration’s (EIA) data, released on Wednesday, showed an increase in US crude inventories.
However, the OPEC’s recent projections of robust demand growth limited the overall losses for crude oil.
Why it matters: The EIA said US commercial crude inventories had climbed by 12 million barrels to 439.5 million barrels in the week ended February 9. This was significantly higher than the average market expectations of a weekly gain of 2.9 million barrels. Late Tuesday, the API (American Petroleum Institute) reported a rise of 8.5 million barrels in crude inventories. Some of the gain in inventories was due to the ongoing closure at BP’s Whiting oil refinery.
US crude refinery inputs averaged 14.5 million bps (barrels per day) last week, representing a decline of 297,000 bpd from the previous week’s average.
The EIA’s data also showed gasoline supplies falling 3.7 million barrels and distillate supplies declining 1.9 million barrels last week.
US oil production came in unchanged at a record high of 13.3 million bpd, according to the EIA.
On Tuesday, the OPEC (Organization of the Petroleum Exporting Countries) said in its monthly report that global oil demand could increase by 2.25 million bpd this year and by 1.85 million bpd next year.
Some weakness in the greenback also limited the overall losses for crude oil as a lower US dollar makes commodities cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.23% to 104.72 on Wednesday.
WTI crude for March delivery declined $1.23 to close at $76.64 per barrel on the NYMEX (New York Mercantile Exchange) on Wednesday, after recording gains in each of the previous seven sessions. April Brent crude, the global benchmark, fell $1.17 to settle at $81.60 per barrel on ICE Futures Europe.
In other energy trading, March gasoline fell by 7 cents to $2.32 a gallon, March heating oil declined 9 cents to $2.81 a gallon and natural gas for March delivery lost 8 cents to $1.61 per million British thermal units.
What to watch: Investors will continue monitoring geopolitical factors, which are expected to significantly impact oil prices ahead.
The release of natural gas stockpiles data from the EIA will also remain in focus today. US natural gas supplies fell by 75 billion cubic feet during the week ended February 2, 2024.
Context: US stocks closed higher on Wednesday, after recording a sharp sell-off in the previous session.
Details: On Tuesday, the Dow Jones index shed more than 1% to record its worst session since March 2023. The S&P 500 also tumbled more than 1% following the release of inflation data for January.
US annual inflation rate fell to 3.1% in January, from 3.4% in December, but came in higher than market expectations of 2.9%. On a monthly basis, the US CPI rose by 0.3%, while the core CPI rose by 0.4% in January.
Investors continue to assess the latest earnings reports from major companies. Shares of Lyft jumped over 35% on Wednesday, after the company reported upbeat fourth-quarter results. Zillow Group’s stock climbed around 8% on better-than-expected results for its fourth quarter.
On the economic data front, US mortgage applications slipped by 2.3% in the latest week, versus a 3.7% surge a week ago.
The Dow Jones index jumped 151.47 points, or 0.40%, to close at 38,424.27 on Wednesday. The S&P 500 rose 0.96% to 5,000.62, while the Nasdaq 100 surged 1.18% to settle at 17,807.63 during Wednesday’s session.
What to watch: Investors await the release of economic data on retail sales, initial jobless claims and industrial production from the US today. Retail sales in the US, which surged 0.6% month-over-month in December, are expected to decline by 0.1% in January.
The number of people claiming jobless benefits is projected to increase to 220,000 in the latest week, after declining by 9,000 to 218,000 in the previous week. Analysts expect industrial production in the US to increase by 0.3% in January, compared to a 0.1% gain in December.
Other Markets: European indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.75%, 0.38%, 0.68% and 0.50%, respectively.
NATO Secretary-General Jens Stoltenberg urged US lawmakers to approve the bill that would provide $61 billion in assistance to Ukraine. The news sent the RUB/USD pair lower in forex trading this morning.
Australia’s unemployment rate rose to 4.1% in January, from 3.9% in the previous month. The figure came in above market expectations of 4.0% and marked the highest reading since January 2022, exerting pressure on the AUD/USD forex pair.
Singapore’s current account surplus grew to S$34.41 billion in the fourth quarter, from S$25.03 billion in the year-ago period. This being the largest surplus since the second quarter of 2022 sent the SGD/USD pair higher this morning.
India’s total passenger vehicle sales jumped by 13.9% year-over-year to 339,441 in January, accelerating from a 3.2% increase in December, which lent support to the INR/USD forex pair.
New Zealand’s number of visitor arrivals jumped by 14.8% year-over-year to 418,900 in December, sending the NZD/USD pair higher this morning.
Saudi Arabia’s inflation rate and wholesale prices, UK’s GDP growth rate, business investment, goods trade balance, industrial production, manufacturing production, balance of trade, construction orders, construction output and labour productivity, Spain’s inflation rate, Turkey’s foreign exchange reserves and central government budget balance, Italy’s balance of trade, Eurozone’s balance of trade, South Africa’s value of recorded building plans, Brazil’s IBC-Br economic activity index, Canada’s housing starts and manufacturing sales, US export prices, import prices, NY Empire state manufacturing index, Philadelphia Fed manufacturing index, continuing jobless claims, capacity utilization, manufacturing production, business inventories and NAHB/Wells Fargo housing market index, as well as India’s balance of trade.
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