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Oil prices slip on surprise build in U.S. crude stocks

CommoditiesFeb 24, 2021 03:25AM ET
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© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub

By Sonali Paul and Koustav Samanta

MELBOURNE/SINGAPORE (Reuters) - Oil prices were lower on Wednesday after industry data showed a surprise build in U.S. crude stocks last week as a deep freeze in the southern states curbed demand from refineries that were forced to shut.

Crude stockpiles rose by 1 million barrels in the week to Feb. 19, the American Petroleum Institute (API) reported on Tuesday, against estimates for a draw of 5.2 million barrels in a Reuters poll.

API data showed refinery crude runs fell by 2.2 million bpd.

Brent crude futures slipped by 6 cents, or 0.1%, to $65.31 a barrel at 0748 GMT, but narrowed losses earlier in the session that sent it to as low as $64.80.

U.S. West Texas Intermediate (WTI) crude futures were down 29 cents or 0.5% at $61.38 a barrel, after trading as low as $60.97 earlier on Wednesday.

But Brent may rise into a range of $66.45-$66.97 per barrel again, as suggested by its wave pattern and a projection analysis, said Reuters technical analyst Wang Tao.

"The key question is how quickly does U.S. oil supply recover," Commonwealth Bank analyst Vivek Dhar said.

"It looks like supply will recover faster than refineries, and supply is going to outpace demand in the next few weeks. That will give negative weight to the market."

Investors will be awaiting confirmation from the U.S. Energy Information Administration later on Wednesday that crude inventories rose last week, despite the hit to shale oil production amid the unprecedented icy spell in the U.S. south.

Traffic at the Houston ship channel was slowly coming back to normal but terminals were still facing several issues due to last week's freezing weather in Texas.

The price retreat is being seen as a pause following a rally of more than 26% to 13-month highs in both Brent and WTI since the start of the year.

"This rally has certainly overshot itself... We are at levels much higher than pre-Covid and demand nowhere near those levels," said Sukrit Vijayakar, director of energy consultancy Trifecta.

Prices have jumped due to the U.S. supply disruption and supply discipline by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, led by an extra 1 million bpd cut by Saudi Arabia.

Oil prices slip on surprise build in U.S. crude stocks
 

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Comments (2)
Joe Mead
Joementum Feb 24, 2021 5:15AM ET
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really couldn't have timed that genius headline any better lol
Silver Bull
Silver Bull Feb 24, 2021 2:28AM ET
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The world has gone mad
Joe Mead
Joementum Feb 24, 2021 2:28AM ET
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it makes more sense than the silver price imo
 
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