Oil prices ended lower after reports of more SPR releases combined with (hawkish-implying) higher than expected inflation data.
The SPR release news follows Russia’s announcement late last week that it will cut oil production by 500,000 barrels per day starting in March, in retaliation to price caps imposed by the West.
“Those cuts in the month of March will total roughly 15 million barrels, but the 26 million barrel release from the SPR by the U.S. beginning April 1st will more than offset those lost barrels, at least in the near term,” said Seven Report’s Richey.
Oil prices have also “started to key off of short-term interest rates in the wake of the CPI report as deep yield curve inversions across durations continue to blare economic warning signs about a looming recession,” he said.
“A recession is never good for oil and refined products markets from a demand standpoint, and energy traders remain wary of a still elevated recession threat despite recent optimism in risk assets.”
So all eyes on inventories for demand concerns and fears that the recent trend of broad-based builds is set to continue…
Crude +10.507mm (+600k exp)
Gasoline +846k (+1.6mm exp)
Distillates +1.782mm (-100k exp)
for the 3rd week in a row, inventories built across the board with a huge 10.5mm barrel rise in crude stocks (the 8th weekly build in a row). Cushing stocks rose for the 7th week in a row and both gasoline and distillates saw inventories build…
WTI was hovering just above $79 ahead of the API print and slipped lower after the big build…
Finally, we note that OPEC expects a slightly tighter global oil market than previously forecast as the group nudged up its demand estimate and trimmed its supply outlook.