March 1 (UPI) — Supply-side strains resurfaced in the United States to help send crude oil prices on pace for a second day of heavy losses in Thursday trading.
Commodities markets were jolted by indications that crude oil inventories in the United States, the world’s leading economy, were building even as the country is exporting more of its oil and natural gas.
The price for oil was recovering some lost ground in early Wednesday trading, but reversed course after the U.S. Energy Information Administration reported a surplus in oil and gasoline inventories.
An early-week survey from commodity pricing group S&P Global Platts showed an expected gain of 2.1 million barrels of oil last week, while the American Petroleum Institute reported a gain of 933,000 barrels in U.S. crude oil inventories.
EIA reported U.S. commercial crude oil inventories swelled by 3 million barrels. But at 423 million barrels, that’s still at the low-end of average. Gasoline inventories, which serve as a loose barometer for demand, increased 2.5 million barrels and remain at the high-end of average even as U.S. economic sentiments remain optimistic.
Crude oil prices continued where they left off in Wednesday trading. The price for Brent crude oil, the global benchmark, was down 0.93 percent as of 9:15 a.m. EST to $64.13 per barrel. West Texas Intermediate, the U.S. benchmark, was down 0.68 percent to $61.22 per barrel.
Giovanni Staunovo, a commodity analyst for UBS, told UPI the trend in trading reflected a hangover from EIA’s report and declines in the broader equity markets.
“Maybe I should add that last week prices shot up on bullish stats, and now it is just a correction,” he said.
The Organization of Petroleum Exporting Countries said last week that, collectively, member states were doing more than they needed to do to erase a market surplus, but acknowledged the strong compliance came from a few overachievers. Libyan production, meanwhile, was curtailed at one of the country’s largest fields and Venezuela is on the decline on economic and political strains.
In the U.S. economy, the Commerce Department on Thursday reported both personal incomes and disposable personal income improved in January, but attributed the gains to the temporary tax cuts enacted at the start of the year.
For labor, first-time claims for unemployment for the week ending Feb. 24 declined 10,000 to hit the lowest level in almost 50 years. The less-volatile four-week moving average declined 5,000.