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Crude oil futures closed higher Thursday, after the U.S. reported a smaller than expected weekly increase in domestic crude inventories, while U.S. natural gas turned lower a day after its biggest percentage gain since July 2022.
The Energy Information Administration said U.S. commercial crude inventories rose by 3.5M barrels to 443M barrels for the week ended February 16, registering a build despite solid crude exports, ongoing refinery maintenance and firm crude imports – although the total was less than expected by many market watchers.
U.S. crude inventories have climbed for four straight weeks as outages at large refineries have left utilization rates at the lowest level in two years; BP’s (BP) 435K bbl/day Whiting refinery in Indiana – the largest in the U.S. Midwest – has been idled since a power outage on February 1, and TotalEnergies’ (TTE) 238K bbl/day refinery in Port Arthur, Texas, is still operating minimally following a weather-related outage.
Oil markets continue to battle between geopolitical concerns and fundamentals, but “deep refinery maintenance rolling on from the U.S. into Europe and then China in the coming months means if it weren’t for geopolitical tensions, prices would be lower,” Kpler analyst Matt Smith said.
Front-month West Texas Intermediate crude (CL1:COM) for April delivery on Nymex settled +0.9% at $78.61/bbl, and April Brent crude (CO1:COM) ended +0.7% to $83.67/bbl, while March Nymex natural gas (NG1:COM) finished -2.3% to $1.732/MMBtu after skyrocketing 12.5% on Wednesday.
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The premium for front-month WTI crude futures to the second month was up to $0.75/bbl, a spread that has widened in recent sessions, which “indicates a tightening market,” UBS analyst Giovanni Staunovo said, as market players likely are pricing in a potential disruption to supply in the near future from the Middle East or elsewhere.