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ANS holds mid-$70s Prices cool on surprise US inventory jump, lack of Fed rate cut
Steve Sutherlin Petroleum News
Alaska North Slope crude dropped 92 cents Jan. 29 to close at $74.37 per barrel, while West Texas Intermediate dropped $1.15 to close at $72.62 and Brent dropped 91 cents to close at $76.58.
The benchmarks posted their lowest closing prices of the year so far after U.S. Energy Information Administration data showed a weekly jump in commercial crude inventories after five consecutive weekly declines.
Traders continued to cast a wary eye at demand and the possibility that President Donald Trump will impose tariffs in days to come on Canada and Mexico -- which may disrupt crude supplies.
The oil market is "undoubtedly in a phase dominated by bearish demand concerns," Steven Innes, managing partner at SPI Asset Management told MarketWatch Jan. 29. "The combination of unsettling economic data from China and a (Federal Reserve) that's hitting the pause button on rate changes casts a long shadow over risk sentiment."
Fed Chair Jerome Powell said after the Fed held rates steady Jan. 29 that rates are in "meaningfully restrictive" territory -- still putting downward pressure on prices and the economy -- while adding that the Fed was in "no hurry" to remove that restriction.
Sentiment in oil markets is "notoriously volatile. ... there has been a rebound from weekly lows as risk sentiment stabilized," Innes said. "This is partly due to the moderated approach to tariffs that, while gradual, allows room for negotiations and concessions."
Upcoming personal consumption expenditures data may show a softening economy, lifting the Fed pause on rate cuts, but an anticipated downward revision in headline employment could dampen the somewhat positive outlook, he said.
Innes said he thinks oil traders will focus more attention on the EIA inventory reports, which will be "crucial in assessing whether President Trump's nudging can successfully encourage U.S. producers to increase output."
U.S. commercial crude oil inventories -- excluding Strategic Petroleum Reserve supplies -- jumped by 3.5 million barrels from the previous week to 415.1 million barrels -- 6% below the five-year average for the time of year.
EIA data was expected to show crude levels up 2.6 million barrels on average, based on a survey of analysts conducted by S&P Global Commodity Insights.
Total motor gasoline inventories increased by 3.0 million barrels for the period, to 248.9 million barrels -- slightly below the five-year average for the time of year, the EIA said. Distillate fuel inventories fell 5.0 million barrels to 124.0 million barrels -- 9% below the five-year average for the time of year.
The S&P survey forecast an inventory increase of 1.4 million barrels for gasoline and a supply decline of 2.4 million barrels for distillates.
Prices edged upward Jan. 28 as ANS posted a 51-cent gain to close at $75.29, WTI rose 60 cents to close at $73.77 and Brent added 41 cents to close at $77.49.
ANS plunged $1.41 Jan. 27 to close at $74.78, as WTI plunged $1.49 to close at $73.17 and Brent plunged $1.42 to close at $77.08.
On Jan. 24, ANS added 10 cents to close at $76.20, WTI added 4 cents to close at $74.66 and Brent rose 21 cents to close at $78.50.
ANS fell 70 cents Jan. 23 to close at $76.10, while WTI fell 82 cents to close at $74.62 and Brent fell 71 cents to close at $78.29.
From Wednesday to Wednesday, ANS fell $2.42 from its close of $76.79 Jan. 22 to $74.37 on Jan. 29.
On Jan. 29, ANS traded at a $1.75 premium over WTI, and at a $2.21 discount to Brent.
Ukraine continues to hit Russian oil targets Ukraine sprang a drone attack on the Nizhny Novgorod Oil Refinery in the Novgorod Region of western Russia Jan. 29.
"This refinery is involved in providing support to the Russian occupation army," the General Staff of the Armed Forces of Ukraine said in a Facebook posting.
The announcement said that following the UAV strike, "a powerful fire was recorded on the territory of the facility," adding that the results and extent of the damage were being clarified.
"Combat work on strategic facilities involved in providing support for the Russian armed aggression against Ukraine will continue," it said.
Ministry of Defense of Russia said on Telegram that over the course of the night, air defense systems intercepted and destroyed 104 Ukrainian unmanned aerial vehicles.
The strike at the Norsi facility is the second in less than a week, the ministry said, adding that Ukraine hit a major Russian oil refinery in Ryazan at the end of the previous week, causing significant damage and disrupting operations.
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