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Oil Prices Stay up Despite Largest Gasoline Build in 21 Months

Commodities Jan 05, 2022 11:56AM ET
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© Reuters.

By Barani Krishnan

Investing.com - Oil prices were up for a third day in a row on Wednesday as promising monthly U.S. jobs data due later in the week offset unexpectedly large builds in fuel stockpiles that would have typically driven the market lower.

The U.S. Labor Department is due to report December payroll numbers for both the public and private sectors on Friday, with expectations for a growth of 424,000 jobs versus November’s gain of 210,000. Ahead of those numbers, payrolls surveyor ADP reported on Wednesday that private sector jobs itself grew almost twice as much to expectations last month, hitting 807,000.

“There is a strong correlation between monthly U.S. jobs numbers and oil consumption and I think that’s what’s keeping the oil market higher today, in spite of the huge unexpected product inventories for last week,” said John Kilduff, founding partner at Again Capital, an energy hedge fund in New York.

Crude oil stockpiles fell by 2.114 million barrels last week, the Energy Information Administration, or EIA, said on Wednesday. Analysts tracked by Investing.com had expected a draw of 3.283 million barrels instead.

Gasoline stockpiles, meanwhile, jumped by 10.128 million barrels last week, the EIA said, compared with expectations for a rise of 1.775 million. Historical EIA showed that to be the largest weekly surge in gasoline stocks since April 2020, during the height of the coronavirus crisis. 

Distillates inventories also swelled more than expected, with a tally of 4.418 million barrels last week against a forecast build of 1.525 million.

Kilduff said the first week of January seasonally showed larger-than-expected drawdowns in crude stocks and higher-than-forecast builds in product inventories as those with crude barrels in their hold cleared them to avoid tax liabilities for the previous year.

“But a 10 million-barrel build in gasoline is huge, to say the least,” he added. “We’ll have to see if there’s enough consumption in the next few weeks to result in draws. Otherwise oil and gasoline prices might have to give back some, considering that OPEC+ has announced a production hike for February.”

OPEC+ — which groups the 13-member Saudi-led Organization of the Petroleum Exporting Countries with 10 other oil producers steered by Russia — greenlighted at a meeting on Tuesday a 400,000 barrel-per-day output hike for next month, similar to what it had done each month since August.

By 11:46 AM ET (16:46 GMT), West Texas Intermediate, the benchmark for U.S. crude, was up $1.26, or 1.6%, at $78.25 per barrel, after hitting an intraday high of $78.49. WT has risen 4% since the year began.

London-traded Brent, the global benchmark for oil, showed a gain of $1.18, or 1.5%, at $81.18 per barrel. Brent is up 4.4% on the year.

(Additional reporting by Sam Boughedda)

Oil Prices Stay up Despite Largest Gasoline Build in 21 Months
 

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Comments (15)
Alan Rice
Alan Rice Jan 05, 2022 2:27PM ET
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World Oil Policy for 150 years: Free oil for all !! (NOT smart.)
Alex Lopez
Alex Lopez Jan 05, 2022 1:59PM ET
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sell into $70, followed by 62 and finally 59... then we can set longs to $100
Alex Lopez
Alex Lopez Jan 05, 2022 1:57PM ET
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WTI 70, 62 then finally 59... after set longs for 100 a barrel
Andrew Ulferts
Andrew Ulferts Jan 05, 2022 1:50PM ET
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This could be the headline for your investigation: US tries everything in their power to reign in soaring oil prices. Energy Crisis seems imminent.
Andrew Ulferts
Andrew Ulferts Jan 05, 2022 1:46PM ET
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Barani- please investigate and report on how much gasoline and oil we imported, and released from the SPR. You must start telling the WHOLE story. News has no agenda.
Barani Krishnan
Barani Krishnan Jan 05, 2022 1:46PM ET
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Andrew, I think I have told MORE story than Bloomberg and Reuters combined -- go read theirs to see if it's as nuanced as mine based on the 2021 tax/upcoming December jobs situations. Instead of being just a charging bull. try and be appreciative for a change, Andrew.
Me comment
Me comment Jan 05, 2022 11:23AM ET
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oil stock draw all and then a lot of slow demand went into the hugh build of distillates and gasoline inventories. Next week watch for a build in oil inventories and small declines in gas and disttiliate inventories.
Deborah Beal
Deborah Beal Jan 05, 2022 11:16AM ET
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nothing rational about builds and rising prices of oil
Sahamad Iswandy
Sahamad Iswandy Jan 05, 2022 11:16AM ET
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stock decrease will cause positive impact to crude oil price
Sahamad Iswandy
Sahamad Iswandy Jan 05, 2022 11:16AM ET
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stock decrease will cause positive impact to crude oil price
Sahamad Iswandy
Sahamad Iswandy Jan 05, 2022 11:14AM ET
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go up till 90
 
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