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Oil dips after surge in US crude inventories
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Oil dips after surge in US crude inventories
Mar 10, 2021 2:58 PM

Oil prices fell on Wednesday after a large jump in U.S. crude inventories in the aftermath of last month's Texas winter storm, but price declines were limited due to an upbeat forecast for global economic recovery.

Brent crude lost 30 cents, or 0.4%, at $67.22 a barrel by 11:31 a.m. EST (1631 GMT) and U.S. West Texas Intermediate crude shed 38 cents, or 0.6%, at $63.63 a barrel.

U.S. crude oil stocks jumped 13.8 million barrels last week, far exceeding forecasts for a 816,000-barrel rise, as the nation's oil industry continued to feel the effects of a winter storm mid-February that stalled refining and forced production shut-ins in Texas.

Producers appear to be coming back online faster than refiners, swelling inventories, analysts said.

Crude production rose to 10.9 million barrels per day, rebounding to near levels before the freeze, while refinery utilization rates jumped 13 percentage points, but that only brought overall capacity use to 69%, far below seasonal averages for this time of year.

“This could be a little bit of a headwind for prices because the production number is coming up faster than people thought,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

The pandemic-hit global economy is set to rebound with 5.6% growth this year and expand 4% next year, the Organisation for Economic Cooperation and Development (OECD) said in its interim economic outlook. Its previous forecast had been for growth of 4.2% this year.

"When it comes to lifting market sentiment, there is very little that can rival an upgrade to the post-COVID economic recovery," said Stephen Brennock of broker PVM.

Oil prices have been steadily rallying for several months as OPEC+ - consisting of the Organization of the Petroleum Exporting Countries and allies - kept supply curbs in place. After briefly touching $70 per barrel earlier this week, Brent crude has edged off.

OPEC+ agreed last week to largely maintain production cuts in April.

Saudi Arabia's foreign minister said that the kingdom and Russia were keen for fair oil prices and will continue their cooperation in the framework of the OPEC+ group.

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