After rebounding by some 5% earlier this week on China demand recovery optimism, crude oil prices have shed over 1% on Thursday, following U.S. inventory data showing increasing stockpiles.
At 12.24 p.m. EST, Brent crude was trading down 1.09% on the day at $84.16 per barrel, while WTI was trading down 1.19% at $77.54 per barrel.
On Wednesday, the EIA reported another inventory build, putting downward pressure on oil prices. That report came after three weeks of inventory builds. As of the latest EIA report, 455.1 million barrels, U.S. crude inventories are about 4 percent above the five-year average for this time of the year, at 455.1 million. Gasoline inventory increased by some 5 million barrels for the week to February 3rd, with production averaging 9.1 million barrels daily.
Overall, crude prices are still higher this week due to optimism from a global economic perspective, as long as this doesn’t “get crushed from over-tightening by central banks”, Oanda senior market analyst Ed Moya said, as cited by Quantum Commodity Intelligence.
“Relentlessly rising U.S. commercial inventories and potentially entrenched inflation limit any immediate upside potential,” PVM analyst Tamas Varga told CNBC, adding that recovering Chinese demand and falling inflation should provide oil price support in H2 of this year.
Europe inventories are also weighing on prices, with Qcintel reporting that gasoil stocks in the ARA (Amsterdam-Rotterdam-Antwerp) region had surged 7% last week to their highest since March 2021.
Earlier on Thursday, JPMorgan Chase & Co. chief executive Jamie Dimon told Reuters that we should be careful about sentiments that suggest we have been victorious over inflation. Dimon said there was still the potential for the Federal Reserve to raise interest rates above the 5% mark.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
- Why The White House Is Wrong About Oil Major Share Buybacks
- U.S. Drilling Activity Continues To Slow
- Will OPEC+ Abandon Its Output Cuts Amid Soaring Chinese Demand?