Saudi Arabia raises crude prices for Asia
Remarks by Federal Reserve Chair Jerome Powell, who affirmed that rate cuts remain likely later this year, also provided a positive backdrop, analysts said.
Price moves
- West Texas Intermediate crude CL00, 0.14% for April delivery CL.1, 0.14% CLJ24, 0.14% rose 98 cents, or 1.3%, to close at $79.13 a barrel on the New York Mercantile Exchange.
- May Brent crude BRN00, 0.11% BRNK24, 0.11%, the global benchmark, rose 92 cents, or 1.1%, to settle at $82.96 a barrel on ICE Futures Europe.
- Back on Nymex, April gasoline RBJ24, -0.16% ended with a gain of 0.8% at $2.554 a gallon, while April heating oil HOJ24, -0.08% finished with a gain of 2.2% at $2.663 a gallon.
- April natural gas NGJ24, -0.21% dropped 1.4% to $1.929 per million British thermal units.
Market drivers
The Energy Information Administration said U.S. crude inventories rose 1.4 million barrels in the week ended March 1. Gasoline inventories dropped 4.5 million barrels, while stocks of distillates fell 4.1 million barrels.
Analysts surveyed by S&P Global Commodity Insights, on average, had expected crude inventories to show a rise of 3.7 million barrels, while gasoline stocks were expected to drop 2.3 million barrels and distillates were forecast to fall 800,000 barrels.
Late Tuesday, the American Petroleum Institute, an industry group, reported that U.S. crude inventories rose by around 400,000 barrels last week, analysts said.
Analysts noted that the big drop in refined-product inventories helped boost prices.
Meanwhile, a jump in the refinery-utilization rate by 3.4%, to 84.9% of capacity, “signaled that the low point of turnaround season is in, and refiners are ramping up in a big way in anticipation of summer driving season,” said Robert Yawger, executive director of energy futures at Mizuho Securities, in a note.
Turnaround season refers to planned periods of extensive maintenance that usually take place in the spring and fall.
Earlier, state producer Saudi Arabian Oil Co. 2222, +0.16%, known as Aramco, said that it raised the official selling price of its flagship Arab Light crude for Asia by 20 cents a barrel, to $1.70 a barrel over the benchmark price for April. That was higher than average market expectations for a premium of around $1.50 a barrel, Ewa Manthey and Warren Patterson, commodity strategists at ING, said in a note.
“Despite climbing oil inventories over the past few weeks, oil prices have been displaying stronger-than-expected strength,” Peter Cardillo, chief market economist at Spartan Capital, said in a note.
“The reasons are likely attributed to OPEC+ extension of oil cuts and improving near-term technical strength. On the other hand, a potential cease-fire between Israel and Hamas could diminish the war premium, restraining prices from moving much beyond the $80 level,” he wrote.
OPEC+ on Sunday extended voluntary production cuts of 2.2 million barrels a day into the second quarter, as expected.
Fed Chair Powell, meanwhile, “said nothing to spook investors” during his testimony before a House committee Wednesday, said Mizuho’s Yawger. Powell said a “soft landing” for the economy was possible and that rate cuts later this year would likely be appropriate.