DTN Oil Update
Oil Futures Down on Larger-Than-Expected Oil Stocks Build
HOUSTON (DTN) --â?¯Oil futures dropped nearly $2 on Wednesday following a larger-than-expected build in oil inventory, as reported by the Energy Information Administration and the American Petroleum Institute for the week ending Feb. 7.
The front-month NYMEX WTI futures contract saw the steepest drop, falling by $1.96 to $71.36 bbl while the April ICE Brent futures contract fell by $1.86 to $75.14 bbl. March RBOB futures contract edged down by $0.0614 to $2.0859 gallon while ULSD futures contract for March delivery fell by $0.0635 to $2.4511 gallon.
The U.S. Dollar Index remained steady at 107.84 against a basket of foreign currencies.
The EIA reported Wednesday that commercial crude oil inventories in the U.S. rose by 4.3 million bbl to 427.9 million bbl in the week ended Feb. 7.
The EIA data on commercial crude oil inventories was below the 9.043 million bbl draw for the same reference week reported by API Tuesday, Feb. 11.
API also reported commercial crude oil supply surged 9.043 million bbl in the week profiled while supply at the Cushing, Oklahoma, tank farm, the delivery point for NYMEX WTI futures, added 407,000 bbl.
EIA said that gasoline stocks dropped by 3 million bbl week-over-week to reach 248.1 million bbl, which was higher than 2.507 million bbl reported by API.
Distillate fuel stocks rose by 100,000 bbl to 118.6 million bbl last week.
The bearish sentiment in the oil futures market was also driven by a higher-than-expected increase of the Consumer Price Index for January, which has been attributed to the uncertainty created by the trade tariff war led by the Trump administration.
The Bureau of Labor Statistics reported Wednesday morning that the CPI rose 0.5% in January, bringing the annualized rate of inflation for the all-items index to 3.0%. January inflation was above the market expectation of 0.4%.
"This is a hot report and with the sense that potential tariffs run upside risk for inflation, the market is understandably of the view the Federal Reserve is going to find challenging to justify rate cuts in the near future. Our view remains that September is the most likely point for the next move lower with markets only pricing 18bp of a 25bp cut at that meeting with only 26bp priced for the whole year," James Knightley, chief international economist for ING Research, said in a report Wednesday.
Tuesday, during his testimony before the Senate Banking Committee, Federal Reserve Chair Jerome Powell stated that the Fed is not in a hurry to increase interest rates as the economy remains strong.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
