Oil prices slip on surprise build in U.S. crude stocks
By Sonali Samanta and Paul and Koustav
MELBOURNE/SINGAPORE (Reuters) – Oil prices on Wednesday dropped after industry reports that revealed shocks last week as deep freeze in U.S. crude reserves in the Southern States decreased demand from forced-to-close refineries.
Crude stocks rose by 1 million barrels a week to 19 February, an estimated 5.2 million barrels in a Reuters survey published on Tuesday by the American Peter Institute (API).
Refinery crude runs shows API data decreased by 2.2 million bpd.
The oil future of Brent dropped by 6 cents to $65.31 a barrel at GMT 0748, but limited the losses earlier in the day, to as low as $64.80.
West Texas' oil futures (WTI) fell 29 cents or 0.5% at $61.38 a barrel, after closing at $60.97 earlier on Wednesday.
But Brent can rise again to $66.45-$66.97 per barrel, as its wave trend and a forecast study indicate, technical analyst Wang Tao from Reuters said.
"The key question is how quickly does U.S. oil supply recover," said the analyst Vivek Dhar of the Commonwealth Bank.
"It looks like supply will recover faster than refineries, and supply is going to outpace demand in the next few weeks. That will give negative weight to the market."
Investors are waiting for clarification from the United States.
Energy Information Administration consequently rose on Wednesday last week, amid the effect on shale petroleum production in the unprecedented glacial spell in the US South.
Traffic on the Houston Ship Channel steadily returned back to normal, but terminals experienced some problems because of the freezing weather in Texas last week.
The market withdrawal is seen as a pause in Brent and WTI after the start of the year after a surge of 26% to 13 months.
"This rally has certainly overshot itself... We are at levels much higher than pre-Covid and demand nowhere near those levels," says Sukrit Vijayakar, Trifecta energy consulting chief.
The prices leapt due to the US market interruption and supply discipline, collectively known as OPEC+, of the Association of Petroleum Exporting Countries and its allies and led by Saudi Arabia's extra 1 million bpd.
(The Singapore stories of Roslan Khasawneh and Koustav Samanta and Melbourne reports of Sonali Paul; Edwina Gibbs and Ana Nicolaci da Costa editing)