Surging Crude Inventories Add to Mixed Oil-Market Signals
October 17 2019 - 3:35PM
Dow Jones News
By Amrith Ramkumar
Oil-market analysts are struggling to discern whether a recent
rise in crude inventories is signaling excess supply ahead or is a
result of lower refining activity, adding to the complicated
signals buffeting prices.
U.S. crude futures swung between gains and losses Thursday after
the latest stockpile data before closing up 1.1% at $53.93 a barrel
on the New York Mercantile Exchange. They are still down 19% from
their April peaks on fears that soft demand and steady production
will result in a supply glut. Brent crude, the global gauge of
prices, added 0.8% to $59.91 a barrel on the Intercontinental
Exchange.
Prices were little changed following Energy Information
Administration figures showing that U.S. inventories surged 9.3
million barrels during the week ended Oct. 12, a much larger rise
than the 2.3-million-barrel increase expected by analysts and
traders surveyed by The Wall Street Journal.
Stockpiles are about 2% above their five-year average for this
time of year and U.S. production stayed at a record 12.6 million
barrels a day last week, signaling that there is plenty of crude
available.
At the same time, inventories of gasoline and distillates fell
more than analysts had anticipated and refinery activity remained
muted in part due to seasonal maintenance, the report showed. Many
refineries that turn crude into fuel products undergo maintenance
in the fall because demand tends to wane during this time of year.
Once refining activity picks up again, inventories could
decline.
In another encouraging sign for bullish oil investors, data on
total products supplied, a measure of fuel consumption, show that
demand is higher than it was at this time last year. Those figures
could ease some fears of a sharper-than-expected slowdown in
consumption that some expect to push prices even lower.
Traders are also weighing signs of thawing trade tensions
between the U.S. and China, progress on Britain's exit from the
European Union and a drop in global interest rates that could help
the world economy stabilize and support demand.
Tensions in the Middle East have also given prices a bit of a
boost at times this year as analysts try to gauge whether sustained
supply disruptions could lead to shortfalls.
The complicated dynamics have caused both periods of heightened
volatility and muted moves in oil prices, which have often shrugged
off supply and demand figures in recent months due to the changing
sentiment in the market. That was the case again Thursday, when
prices stayed in their recent range after the biggest one-week rise
in U.S. crude stockpiles since late April.
Another factor helping commodities Thursday was a decline in the
dollar, as a weaker U.S. currency makes assets priced in dollars
cheaper for overseas buyers.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
October 17, 2019 15:20 ET (19:20 GMT)
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