Both ICE Brent and NYMEX WTI continue to trade in a narrow range this morning as another week of inventory build in the US outweighed the strength in the timespreads and expectations of supply cut extension by the OPEC+.
Yesterday’s EIA’s weekly US inventory report was bearish for the oil market. US commercial crude oil inventories (excluding SPR) increased by 4.2MMbbls for the week ending 23 February. The market was anticipating an increase of around 2.6MMbbls, while API reported a build of 8.43MMbbls. This was the fifth consecutive week of additions, with US oil inventories reaching the highest levels since November as refinery runs are still seasonally the lowest since 2021. When factoring in the SPR, the build was even higher, with total US crude oil inventories increasing by around 4.9MMbbls. Total US commercial crude oil stocks now stand at 447.2MMbbls, still around 1% below the five-year average. Meanwhile, oil inventories at Cushing, Oklahoma increased by 1.5MMbbls to 30.9MMbbls. Crude oil exports from the US decreased by 0.24MMbbls/d to around 4.73MMbbls/d while imports also fell by 0.3MMbbls/d to around 6.4MMbbls/d.
As for refined product inventories, gasoline inventories fell by 2.83MMbbls, against a forecast for a drawdown of 2.35MMbbls. Distillate stockpiles fell by 0.5MMbbls last week, lower than the expectations for a decline of 2.4MMbbls. Refineries operated at 81.5% of their capacity, slightly up from 80.6% in the previous week, but 4.3% lower than the same period last year.
The latest estimates from China National Petroleum Corporation (CNPC) show that the oil demand growth in the country could slow down significantly in 2024 due to a lack of post-pandemic recovery and increasing dependency towards new energy vehicles that would increase fuel switching. The corporation now expects Chinese oil demand to grow by a modest 1% to 764mt (~15.3MMbbls/d), the lowest demand growth forecast in at least a decade excluding the COVID-19-affected period.
