Rising inventories and stock sell-off pressure Crude oil closed lower for two consecutive days

Financials reported on January 22 that the increase in US crude oil inventories and the stock sell-off put pressure on energy investment sentiment, and crude oil futures fell from the previously recorded high of more than seven years for the second consecutive trading day.

The price of West Texas Intermediate Oil (WTI), which delivered in March on the New York Mercantile Exchange, fell 41 cents, or 0.5 percent, to close at $85.14 a barrel, a cumulative 2.2 percent gain for the week. Brent crude oil, the global benchmark for ice European Futures Exchange, fell 49 cents to nearly 0.6 percent to $87.89 a barrel in March, up 2.1 percent this week. Both WTI and Brent crude oil rose for the fifth consecutive week.

Tyler Richey, co-editor of Sevens Report Research, said: "The surge in safe-haven funding in the second half of the week caused crude oil futures to give back most of the gains gained this week. Traders are becoming increasingly sensitive to expectations of rate hikes and concerns that the Fed could stifle the recovery. At the same time, he also said that the long-term outlook for oil remains favorable. U.S. oil production has yet to react to higher oil prices, and OPEC+ members remain above 100 percent compliance with individual production quotas, and the demand outlook continues to improve as Omicron concerns fade and growth prospects rebound.

Edward Moya, senior market analyst at OANDA, said: "Crude oil prices may not be guaranteed to climb to $100, but supply-side fundamentals certainly support what could happen that in the summer." ”

"The next few trading days could be tough for energy traders as investors' moves to adjust their positions ahead of next Wednesday's Federal Open Market Committee (FOMC) policy decisions, as well as some of the geopolitical risks that are brewing – including tensions between Russia and Ukraine, Iran nuclear talks and developments– could further destabilize oil prices," he said. ”

The U.S. Energy Information Administration announced Thursday that U.S. crude inventories, excluding SPR, had unexpectedly increased by 500,000 barrels in the week ending Jan. 14. The EIA also reported a 5.9 million barrel increase in gasoline stocks and a 1.4 million barrel decrease in distillate stocks.

Karsten Fritsch, an analyst at Commerzbank, said in a note: "Crude oil prices have only recently reacted to news that has supported price increases, such as temporary supply disruptions that have been resolved. The question now is whether the pullback will continue, or whether market participants will see the lower price level as a buying opportunity. As things stand, both of these scenarios can occur. ”

Growing risks to global oil supplies have supported the overall trend of oil prices this week, sparking rumors that oil prices will eventually rise to $100 a barrel. Since 2014, The trading prices of West Texas Intermediate (WTI) and Brent Crude (Brent) have never reached such high levels.

Markets have been closely monitoring geopolitical developments this month, including unrest in Kazakhstan, attacks on the united Arab Emirates' oil infrastructure, temporary disruptions in crude supplies on the Kirkuk-Ceyhan pipeline, and the possibility of a Russian invasion of Ukraine. On Friday, the Saudi-led coalition launched an airstrike on Houthi-controlled territory in Yemen, killing dozens of people in a prison and exacerbating tensions in the Middle East, the Wall Street Journal reported.

Matthew Parry, longtime head of analytics at Energy Aspects, said oil prices could reach $100, but there is no serious geopolitical shock, which could not happen until next year. "The main reason for this expected rise will be that aggregate demand (for oil) continues to outpace relatively weak supply growth, which is the result of years of insufficient [capital expenditures]," he said. Because while global inventories are relatively low, oil demand continues to run deficits. ”

Among other trades on the New York Mercantile Exchange, gasoline fell to $2.442 a gallon in February, a decline of 0.8 percent, to close at 1 percent of the settlement price a week ago. Heating rose 0.7 percent to $2.691 a gallon in February, up 2.2 percent a week. Natural gas prices closed at $3.999/MMBtu in February, up 5.2 per cent but down 6.2 per cent this week.

This article originated from the financial world