By Myra P. Saefong and William Watts
Oil futures ended on a mixed note Thursday, with global prices slightly higher but U.S. prices modestly lower, as data from the American Petroleum Institute showed an unexpected rise in U.S. crude inventories, ahead of the U.S. government’s supply report due Friday.
The Energy Information Administration won’t be releasing its weekly data on oil and petroleum product supplies until Friday at 11 a.m. Eastern, attributing the delay to Monday’s Martin Luther King, Jr. holiday, as well as Wednesday’s U.S. presidential inauguration.
The EIA also delayed its weekly release for natural-gas supplies to Friday at 10:30 a.m. Eastern.
Thursday’s price decline for oil price was “triggered by release of API data that showed the first inventory build after three weeks of decline,” Manish Raj, chief financial officer at Velandera Energy, told MarketWatch. Overall, however, “one-off inventory fluctuation generally does not affect oil prices, since traders look for multiweek trend. ”
West Texas Intermediate crude for March delivery /zigman2/quotes/211629951/delayed CL.1 -2.94% fell 18 cents, or 0.3%, to settle at $53.13 a barrel on the New York Mercantile Exchange, while March Brent crude , the global benchmark, tacked on 2 cents, or less than 0.1%, to $56.10 a barrel on ICE Futures Europe.
“So far, it is the supply side of the equation that’s moving prices; however if demand falls further, problems may arise for OPEC+ who are doing their best to keep the equation balanced,” said Hussein Sayed, chief market strategist at FXTM, in a note.
The API reported late Wednesday that U.S. crude supplies rose by 2.6 million barrels in the week ended Jan. 15. The data also showed gasoline stockpiles up by 1.1 million barrels, while distillate inventories rose by 816,000 barrels.
The EIA report is expected to show crude inventories down by 2.5 million barrels, according to a survey of analysts conducted by S&P Global Platts. The survey also shows expectations for inventory increases of 2.7 million barrels for gasoline and 600,000 barrels for distillates.
For now, Velandera Energy ‘s Raj said the main driver for oil is actually politics, “as traders try to understand what policies the Biden administration will adopt and what the ramifications of those policies will be.”
President Joe Biden has “already indicated stricter environmental policies and more regulations on interstate oil pipelines,” said Raj. “As these policies impose greater costs for U.S. producers, they will restrict domestic production and therefore support higher oil prices.”
Biden revoked the Keystone XL oil pipeline permit and by doing so, “chooses winners and losers among regional players, but has minimal impact at a global level,” said Raj.
Another unknown factor is the “approach the Biden administration will adopt towards Iran,” he said. “A restoration of the nuclear deal with Iran will unlock at least 2 million barrels of oil per day in an oversupplied market, and certainly has the potential to rock the market balance.”
Also on Nymex Thursday, prices for the front-month natural-gas contract finished lower for a third straight session.
February natural gas lost 1.9% to close at $2.491 per million British thermal units. On average, analysts polled by S&P Global Platts expect Friday’s EIA storage data to reveal a weekly decline of 177 billion cubic feet.