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Oil Prices Set for Another Weekly Loss as Traders Focus on U.S. Interest Rates

Oil Retreats On EIA Inventory Data

Crude oil prices moved lower today after the U.S. Energy Information Administration reported an inventory build of 2.4 million barrels for the week to February 3.

This comes after three weeks of inventory builds, two of them quite substantial. At 455.1 million barrels, U.S. crude inventories are about 4 percent above the five-year average for this time of the year.

In gasoline, the EIA estimated an inventory increase of 5 million barrels for the week to February 3, with production averaging 9.1 million barrels daily.

This compared with an inventory build of 2.6 million barrels and a production rate of 9.4 million bpd for the previous week.

In middle distillates, the EIA reported an inventory build of 2.9 million barrels for last week, with production at an average of 4.7 million bpd.

This compared with an inventory build of 2.3 million barrels and a production rate of 4.7 million bpd for the previous week.

Concern about middle distillate stocks appear to have eased but the fundamental situation with these fuels is a different matter. Reuters' market analyst John Kemp reported earlier this month the U.S. has entered the new year with critically low inventories of middle distillates.

These stabilized towards the end of 2022 thanks to a slowdown in manufacturing activity and freight transport but should these pick up, supply tightness will manifest itself quickly, Kemp warned.

Oil prices, meanwhile, closed Tuesday with a gain after Fed chairman Jerome Powell signaled there will be more rate hikes to come: citing the latest jobs data, Powell said it "shows you why this will be a process that takes a significant period of time."

In addition to this news, continued expectations of strong Chinese oil demand also helped push prices lower for lack of any simultaneous headwinds.

At the time of writing, Brent crude and West Texas Intermediate were both up, with the international benchmark above $84 and WTI at close to $78 per barrel.

By Irina Slav for Oilprice.com

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Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More