WTI falls as Fed takes stock before cutting rates
HOUSTON — US crude oil futures settled lower on Wednesday after the US Federal Reserve held firm on its decision to hold off cutting interest rates in the near future, while growing US crude stockpiles added further pressure.
Brent crude futures settled three cents higher or up 0.04% at $83.68 a barrel. US West Texas Intermediate (WTI) futures settled 33 cents lower or down 0.42% at $78.54. Both benchmarks had fallen $1 in earlier trading.
US crude inventories rose by 4.2 million barrels last week, the Energy Information Administration (EIA) said, surpassing analysts’ expectations of 2.74 million.
Stockpiles have risen for five consecutive weeks due to unplanned refinery outages following a winter storm in January, along with planned plant turnarounds.
US refinery utilization rates edged up 0.9 percentage points last week to 81.5% of total capacity, but were below the 10-year seasonal average. Refineries have operated below 83% utilization rates for the past month, their longest streak in nearly three years.
“Refiners are still sidelined to a great degree, and not making a real effort to rapidly come out of the shutdowns experienced in the aftermath of the cold snap,” John Kilduff, partner at New Yorkbased Again Capital, said.
An ongoing outage at BP’s 435,000-barrel-per-day Whiting refinery in Indiana, the largest plant in the Midwest, has also reduced fuel stock levels, Mr. Kilduff said.
Gasoline stocks, in turn, have drawn down for a fourth straight week to a two-month low at 244.2 million barrels and about 2% below the five-year average for this time of year, the EIA said.
“If this trend continues for the next six to eight weeks, we could see gasoline inventories tighten up as we go into the driving season,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Reports on Tuesday that the Organization of the Petroleum Exporting Countries and allies led by Russia (OPEC+) will consider extending voluntary oil output cuts into the second quarter likely provided a floor to falling prices.
And hostilities in the Middle East may have provided some support, after Hamas called for Palestinians to march to Jerusalem’s Al-Aqsa Mosque at the start of Ramadan, raising the stakes in ongoing negotiations for a truce in Gaza, which US President Joseph R. Biden hopes will be in place by then. —