Oil dives $3 after U.S. EIA reports big builds in U.S. crude, fuel stocks

Oil fall by 2% after EIA data shows crude oil, fuel inventory builds By Reuters

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Commodities 34 minutes ago (Feb 01, 2023 17:20)

By Laura Sanicola

(Reuters) -Oil prices fell by 2% on Wednesday after the U.S. government data showed crude oil, gasoline and distillate inventory builds and OPEC and its allies stuck to their output policy.

Brent crude futures were down $1.87, or 2.3%, at $83.59 a barrel by 11:48 p.m. ET (1658 GMT.) West Texas Intermediate (WTI) U.S. crude futures fell by $1.61, or 2%, to $77.26.

U.S. crude oil and fuel inventories rose last week to their highest levels since June 2021, the Energy Information Administration said on Wednesday, as demand remained weak.

Crude inventories climbed 4.1 million barrels in the week ended Jan. 27 to 452.7 million barrels, compared with analysts’ expectations in a Reuters poll for a rise of 0.4 million barrels. That marked the sixth consecutive week of increases as refining utilization declined and net imports climbed.

“The market is reacting to the report that indicates there isn’t demand for crude oil or fuels,” said John Kilduff, partner at Again Capital LLC in New York.

Ministers from the OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia kept their output policy unchanged on Wednesday.

OPEC’s oil output fell in January, as Iraqi exports dropped and Nigerian output did not recover, with the 10 OPEC members pumping 920,000 barrels per day (bpd) below OPEC+ targeted volumes, a Reuters survey found.

The shortfall was bigger than the 780,000 bpd deficit in December.

Elsewhere, Russia’s Deputy Prime Minister said he expected oil demand to rise on the back of Chinese economic activity.

Tamer U.S. rate hike expectations helped to lower the dollar index, which supported oil prices, said PVM analyst Stephen Brennock. A weaker U.S. currency makes dollar-priced oil cheaper for buyers holding other currencies.

The U.S. Federal Reserve is expected to deliver its interest rate decision at 2 p.m. ET (1900 GMT).

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