Crude oil prices hit a 13-month high as investors overlook inventory build
- Crude oil prices are at a 13-month high with WTI and Brent futures trading at $63.70 and $67.56 respectively.
- Investors are overlooking last week's US oil inventory build as the bullish sentiment strengthens.
- Next week's OPEC+ meeting will determine if the member states will continue with output cuts in April.
Crude oil prices have continued with the rally despite Wednesday’s bearish data on US crude oil inventories. On Thursday, WTI futures were at $63.70; its highest price since January 2020. Brent futures are also at 13-month high at $67.56. Investors are looking past the rise in stockpiles as the bullish sentiment takes on the market. The focus is now on next week’s OPEC+ meeting and the resultant decision on oil supply.
US crude oil inventories
Investors seem to be looking past the inventories build as crude oil prices continue with the uptrend. Late on Tuesday, the American Petroleum Institute released data that showed a rise in last week’s crude oil inventories. According to the agency, the stockpiles rose by 1.026 million barrels. Analysts had predicted that the amount of oil in storage dropped by 5.373 million barrels.
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The US crude oil inventories have increased for the first time in a while after the agency released bullish figures for four consecutive weeks. In the prior week, the amount of oil in storage had dropped by 5.8 million barrels.
The Energy Information Administration (EIA) confirmed the rise in inventories by releasing comparable figure on Wednesday. According to the institution, US oil stockpiles soar by 1.285 million barrels. Experts had predicted that the reading will come in at -5.190 million barrels compared to the previous week’s -7.258 million barrels.
As for gasoline inventories, the reading missed the beat by coming in at 0.012 million barrels compared to the forecasted -3.062 million barrels. In the prior week, the stockpiles had risen by 0.672 million barrels.
However, distillates stocks came in better than expected. The decline of 4.969 million barrels was better than the predicted fall of 3.746 million barrels. The figure was also higher than the prior week’s -3.422 million barrels.
At Cushing, which is WTI’s delivery point, the inventories rose by 2.807 million barrels. This comes after the amount in storage fell by 3.028 million barrels in the week before. Last week’s build in crude oil inventories is due to the frigid conditions experienced in Texas, and the subsequent disruption of operations.
Investors looking to trade oil are betting that the slow resumption of production and refinery activities in the state will fuel the ongoing surge in crude oil prices. Analysts at Goldman Sachs expect Brent and WTI futures to reach $75 and $72 per barrel respectively by the third quarter as economies recover.
OPEC+ upcoming meeting
Investors are now keen on the direction that crude oil prices will take after next week’s OPEC+ meeting. The coalition is set to meet on 4th March to discuss its next course of action on production.
In January’s meeting, Saudi Arabia committed to making production cuts of 1 million bpd. The pledge, which helped in the recovery of crude oil prices, was set to last till March. Recently, the kingdom pointed to increasing its output from April.