Oil Prices Skid Over Uncertainties, U.S Inventory Build
Crude oil prices skid over uncertainties in the Russia-Ukraine imbroglio that is affecting supply while the U.S see stockpile rising. Pressures fail to reduce in the crude market following a tweet from Iran’s nuclear top negotiator, saying an agreement is “closer than ever,” OANDA analyst Edward Moya said in an overnight.
According to the analyst, crude prices were not ready for a run towards $100, as Russia-Ukraine tensions would need to intensify or crude output needs to continue to fall short of rising demand for prices to rally above $100.
In addition, the US Energy Information Administration reported a surprise build of 1.12 million barrels, missing the consensus estimate for a draw of 919,000 barrels. In the previous week, inventories declined 4.8 million barrels.
US production also remained steady at 11.6 million barrels and rig counts are rising, Moya noted. Production in the US is expected to rise shortly as the arctic blast has passed. Early in the morning, oil prices were down about 1.3% early Thursday after edging higher on Wednesday, with the commodity holding on to its bullish trend despite prevailing elevated volatility.
Traders appear to be correct as they remained sceptical of Russia’s claim that it has withdrawn troops, according to Matt Simpson, a senior market analyst at City Index. Demand remains high and calls for $100 oil remain, so it is likely that a mere mention of troop withdrawal would topple the oil price rally, Simpson said.
The market remains extremely tight and easing tensions in Ukraine may have only delayed the move to $100 oil, instead of preventing it, OANDA analyst Craig Erlam said in an overnight Wednesday note.
Oil Markets Still Wary of Russia-Ukraine: Oil markets remain worried about potential disruptions to supply amid signs of stronger demand, Australia’s ANZ Bank said in a Thursday note.
US Secretary of State Antony Blinken said he has yet to see evidence of a pullback by Russia, while NATO warned that Russian troops continued to build near the Ukraine border, the bank noted.
Ukraine is also still experiencing cyberattacks. These are shifting the narrative back to the potential for escalation that would lead to supply disruptions, ANZ Bank said. Meanwhile, an implied demand for oil products rose to 22.74 million barrels per day in the US, the highest in weekly data going back to 1990, according to ANZ Bank.
US commercial inventories rose last week by 1.1 million barrels, but stocks fell 1.9 million barrels at the Cushing storage hub. In India, sales of gasoline and diesel rose roughly 7% each during the first half of February as coronavirus cases declined. #Oil Prices Skid Over Uncertainties, U.S Inventory Build
Read: U.S. Threatens to Shutdown Gas Pipeline Project if Russia Invades Ukraine
