Oil prices fell on Thursday, following a greater-than-expected increase in U.S. crude inventories, which raised questions about demand in the largest economy in the world and the country that consumes oil the most, according to a Reuters report. Brent crude futures fell by 0.4 per cent, or 34 cents, to $81.26 a barrel at 0337 GMT. U.S. West Texas Intermediate crude futures wilted by 0.5 per cent, or 38 cents, to trade at $76.26 a barrel. Under pressure from rising U.S. crude inventories, both contracts saw a $1 per barrel loss on Wednesday, with refining hitting its lowest levels since December 2022. According to the Energy Information Administration (EIA), U.S. crude inventories increased by 12 million barrels to 439.5 million barrels in the week ending February 9, significantly surpassing the 2.6 million-barrel increase that analysts had predicted in a Reuters poll. Although traders expressed concerns about demand due to the stock build-up, some analysts stated that lower refinery utilisation rates were the primary cause of the move, particularly with BP's Indiana Whiting plant, which produces 435,000 barrels per day, now offline. "The continued outage at BP's Whiting refinery will have contributed to lower run rates, along with some other refinery maintenance. Lower refinery run rates meant that gasoline stocks declined," the analysts told Reuters. Regarding supply, Kazakhstan declared that it will fulfill its OPEC+ obligations by making up for the oil overproduction it committed to in January within the next four months. Iraq said that it will examine its oil output and, if detected, address any excess output above its voluntary OPEC+ cuts in the upcoming four months. "This comes ahead of OPEC's March meeting, where the group plans to decide whether to extend supply curbs into the second quarter," said ANZ analysts in a note on Thursday, referring to the OPEC+ "Any signs that extension looks unlikely would weigh on sentiment across the oil market." Nevertheless, the EIA data also revealed that distillate and gasoline stocks decreased more than anticipated. Against projections of a 1.2 million-barrel draw, gasoline stocks dropped by 3.7 million barrels to 247.3 million barrels. In contrast to expectations of a 1.6 million-barrel drop, distillate stockpiles decreased by 1.9 million barrels to 125.7 million barrels. According to JPMorgan analysts, fuel demand is continuing to rise, supported by a return to pre-COVID levels of air travel. "Our high frequency demand indicators are showing oil demand increasing by 1.6 mbd in the first two weeks of February vs. January," JPMorgan Commodities Research analysts said in a note, indicating an increase in travel to China over the Lunar New Year vacation.
