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Oil little changed as market discounts big U.S. crude storage build

Published Feb 14, 2023 08:43PM ET Updated Feb 15, 2023 03:32PM ET
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© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford
 
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By Scott DiSavino

NEW YORK (Reuters) -Oil futures were flat to lower on Wednesday as the U.S. dollar strengthened and investors worried that rising interest rates would slow the economy and cut fuel demand.

Oil's losses were limited as the market discounted a big build in U.S. crude stocks due to a data adjustment and as the International Energy Agency (IEA) forecast higher global oil demand growth.

Brent futures slid 20 cents, or 0.2%, to $85.38 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 47 cents, or 0.6%, to $78.59.

The U.S. dollar rose to a near six-week high against a currency basket on strong U.S. retail sales data last month and recent U.S. inflation data, suggesting the Federal Reserve (Fed) will keep monetary policy tight.

"Crude prices are under pressure as the dollar rallies following impressive economic data that paves the way for more Fed tightening," said Edward Moya, senior market analyst at data and analytics firm OANDA.

A stronger dollar can cut oil demand, making crude more expensive for holders of other currencies.

Federal Reserve officials said the U.S. central bank will need to maintain gradual interest rate increases to fight inflation. Investors worry higher rates could slow the economy.

U.S. crude stockpiles jumped by 16.3 million barrels last week to 471.4 million barrels, their highest since June 2021, the U.S. Energy Information Administration (EIA) said.

That was much bigger than the 1.2 million-barrel increase analysts forecast in a Reuters poll. [EIA/S] [API/S] But analysts said an unusually large crude oil supply adjustment contributed to the outsized build.

"Once everyone realized the adjustment threw off the EIA data, scepticism about the big (crude storage) build crept into the market," said John Kilduff, a partner at investment advisory Again Capital LLC in New York. "It's a one-off."

The IEA raised its forecast for 2023 oil demand growth and said there could be a supply deficit in the second half due to restrained production from OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and other oil suppliers including Russia.

The IEA said China will make up nearly half of this year's oil demand growth after it relaxed its COVID-19 curbs, and also said about 1 million bpd of production from Russia will be shut in by the end of the first quarter, citing a European ban on seaborne imports and a Group of Seven (G7) price cap.

The G7 group of wealthy countries includes Canada, France, Germany, Italy, Japan, Britain and the United States.

On Tuesday, OPEC also raised its projection for global oil demand growth and pointed to a tighter market in 2023.

Oil little changed as market discounts big U.S. crude storage build
 

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Comments (5)
ELLIOT MILLER
ELLIOT MILLER Feb 15, 2023 1:08PM ET
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Drilling is still very profitable. WTI drilling costs are about $30 for existing wells and $55 for new wells.
Feb 15, 2023 12:55PM ET
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What if I told you the S&P500 will end the year below 3,000 and never reach all time highs again in our lifetime?
Allen Checora
Allen Checora Feb 15, 2023 12:55PM ET
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Look at European markets......their back to all time highs.
wesley scott
wesley scott Feb 15, 2023 9:53AM ET
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Biden Administration still pulling from the spr
Hank Williams
Hank Williams Feb 15, 2023 8:59AM ET
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Oil increases historically have come out as big surprises. This executive branch is working hard to keep oil prices down because they know the effect they can have. See where this is in six to eight months.
JD Samson
JD Samson Feb 15, 2023 8:59AM ET
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Big reversal. Glad Brain dead finally figured it out
Sajid Shaikh
Sajid Shaikh Feb 15, 2023 7:38AM ET
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Then will the inventory of crude oil be negative?
 
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