Oil prices have had a volatile start to the year as traders attempt to navigate the complex mix of global supply and demand forces. This week, U.S. crude inventories rose by 16.3 million barrels, and the Strategic Petroleum Reserve (SPR) announced a sale of 26 million barrels of oil. On the demand side, the Organization of Petroleum Exporting Countries (OPEC) and its allies have been pressing on with cutbacks in output while the International Energy Agency (IEA) raised its forecast for global oil demand in 2023 to a record.
The Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that U.S. crude inventories rose by 16.283 million barrels during the week ended Feb. 10. This was significantly more than the 800,000-barrel increase predicted by analysts surveyed by The Wall Street Journal. The American Petroleum Institute (API) reported a 10.5 million barrel rise in U.S. crude inventories.
Data from the API revealed that gasoline inventories increased by 5.261 million barrels last week, resulting in a total increase of 846,000 barrels. Distillates increased by 1.728 million barrels compared to the previous week's 1.109 million barrel increase. The EIA estimated an inventory increase of 2.3 million barrels for the week to February 10 in gasoline. U.S. crude oil refinery inputs averaged 15.0 million barrels per day during the week ending February 10, which was 383,000 barrels per day less than the previous week’s average.
On Tuesday, prices of oil declined following the US government's announcement of a plan to release more stock from the Strategic Petroleum Reserve. The additional supply will further destabilize the international market of supply and demand which is already undergoing rapid fluctuations. The DOE announcement Monday, combined with an unexpected inflation figure and a large build in U.S. crude inventories, sent West Texas Intermediate (WTI) crude futures down $2.21 (2.8%) to $77.93 and Brent crude futures down $2.01 (2.3%) to $84.60 a barrel by 9:15 ET.
Oil prices continued to drop following Monday's announcement that the US was releasing additional oil from its strategic reserves, further compounded by an unexpectedly high inflation number.
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