Oil prices continue higher after a smaller-than-expected weekly rise in U.S. crude supplies

Price moves

• West Texas Intermediate crude for April delivery
  CL00,
  +1.18%

  CL.1,
  +1.18%

  CLJ24,
  +1.18%
  rose 38 cents, or 0.5%, to $78.29 a barrel on the New York Mercantile Exchange.

• April Brent crude
  BRN00,
  -0.28%

  BRNJ24,
  +0.98%,
  the global benchmark, was up 30 cents, or 0.4%, at $83.33 a barrel on ICE Futures Europe.

• Back on Nymex, March gasoline
  RBH24,
  +0.95%
  edged down by 0.3% to $2.2789 a gallon, while March heating oil
  HOH24,
  +1.15%
  added 0.3% to $2.713 a gallon.

• March natural gas
  NGH24,
  -4.91%
  dropped 4.7% to $1.689 per million British thermal units after a 12.5% jump the previous session.

Oil supplies

Oil futures were trading near the top of the price range seen over the last three weeks, getting added boost after the Energy Information Administration on Thursday reported that U.S. commercial crude inventories rose by 3.5 million to 443 million barrels for the week ended Feb. 16.

“Despite robust crude exports, ongoing refinery maintenance and firm crude imports have ushered in another crude build,” said Matt Smith, lead oil analyst for the Americas at Kpler.

Late Wednesday, the American Petroleum Institute reported a crude inventory climb of 7.2 million barrels, according to a source citing the data.

On average, analysts had expected the EIA report, which was released day later than usual because of Monday’s Presidents’ Day holiday, to show an increase of 4.4 million barrels, according to a survey conducted by S&P Global Commodity Insights.

The survey found analysts expected refinery runs to remain soft for the rest of the month as BP PLC’s
BP,
-0.47%

BP,
-0.43%
Whiting, Indiana, facility remains shut due to an unexpected power outage and a number of other refineries continue to undergo maintenance. The EIA reported that U.S. crude-oil refinery runs edged up by 31,000 barrels a day to average 14.6 million barrels a day last week.

The EIA report also revealed weekly supply declines of 300,000 barrels for gasoline and 4 million barrels for distillates. The S&P Global Commodity Insights analyst survey showed forecasts for inventory declines of 3.2 million barrels for gasoline and 1.6 million barrels for distillates.

“Given low refinery runs, it is not surprising to see draws to the products — although implied demand for both gasoline and distillates is lagging year-ago levels on the 4-week moving average,” said Smith.

U.S. oil production was unchanged in the latest week, holding at a record 13.3 million barrels a day, the EIA said, while crude stocks at the Cushing, Okla., Nymex delivery hub were up 700,000 barrels at 29.5 million barrels.

Looking at the bigger picture, oil traders continued to monitor developments in the Middle East and weighed the outlook for crude demand.

Meanwhile, an increasing backwardation, in which prices for nearby contracts exceed those for longer-dated futures, is seen pointing to tighter physical supplies.

Natural gas retreats

Natural-gas futures pulled back Thursday after a Wednesday bounce of 12.5%, their biggest one-day percentage gain since July 7, 2022. The rally had come on the heels of a lower production outlook from Chesapeake Energy Corp.
CHK,
-0.80%,
a major shale producer.

On Thursday, the EIA reported that U.S. natural-gas supplies in storage declined by 60 billion cubic feet for the week ended Feb. 16. On average, analysts forecast a decline of 65 billion cubic feet, according to S&P Global Commodity Insights.

The EIA data, however, included a downward revision to previously reported stocks for the week ended Feb. 9, with the EIA revising the stock total for that week to 2.53 trillion cubic feet from 2.535 tcf.

The report marked “another bearish withdrawal,” given that the weekly supply decline was more than 100 bcf less than the five-year average for this time of the season, said Troy Vincent, senior market analyst at DTN. Natural gas stocks are around 12% higher year-on-year and just over 22% higher than the five-year average, he said.