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Oil falls by $1/bbl as US crude build trumps upbeat demand forecast

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Oil falls by $1/bbl as US crude build trumps upbeat demand forecast By Reuters

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Published Feb 14, 2024 01:47
Updated Feb 14, 2024 18:25

© Reuters. Miniatures of oil barrels and a rising stock graph are seen in this illustration taken January 15, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

By Laila Kearney

NEW YORK (Reuters) -Oil futures sank by $1 a barrel on Wednesday as surging U.S. crude inventories pushed down prices, outweighing support from OPEC’s forecast for robust demand growth.

Brent crude futures fell by $1.01, or 1.2%, to $81.76 a barrel at 12:53 p.m. EST (1753 GMT). U.S. West Texas Intermediate (WTI) crude futures lost 94 cents, or 1.2%, at $76.93.

U.S. crude inventories jumped by 12 million barrels to 439.5 million barrels last week, the Energy Information Administration said, far exceeding analysts’ expectations in a Reuters poll for a 2.6 million-barrel rise as refining dropped to its lowest levels since December 2022.

“The refinery utilization rate is a pseudo disaster, down four to five weeks in a row at the end of winter” said Bob Yawger, director of energy futures at Mizuho, adding that refiners have kept activity slow even after emerging from a deep freeze that hampered operations last month.

Refinery crude runs last week fell by 298,000 barrels per day to 14.5 million bpd and refinery utilization rates decreased by 1.8 percentage points to 80.6% of total capacity, both the lowest levels since Winter Storm Elliott similarly knocked scores of refineries offline in December 2022.

On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report that global oil demand will rise by 2.25 million bpd in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.

In other OPEC news, Iraqi Prime Minister Mohammed Shia al-Sudani held a meeting with Saudi Energy Minister Prince Abdulaziz bin Salman, in which he highlighted the importance of coordination between the two countries to maintain stability in oil markets.

Kazakhstan said it will compensate in coming months for its oil overproduction in January, meeting its commitment to OPEC+ production cuts.

Geopolitical factors also influenced oil markets, including conflicts in the Middle East and Russia-Ukraine and the growing view that U.S. interest rate cuts will start later than previously expected.

“Currently events around Israel and Gaza, together with Ukraine’s war against Russia, weighs more on sentiment than disappointing U.S. inflation data,” said PVM analyst Tamas Varga.

Oil falls by $1/bbl as US crude build trumps upbeat demand forecast

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