On Thursday, crude oil futures closed higher following a report of a smaller-than-expected increase in domestic crude inventories, while U.S. natural gas turned lower after its most significant percentage gain since July 2022.
The Energy Information Administration reported a rise of 3.5 million barrels to 443 million barrels for the week ended February 16, signaling a build in crude inventories despite robust crude exports, ongoing refinery maintenance, and strong crude imports.
U.S. crude inventories have climbed for four consecutive weeks due to outages at large refineries, resulting in utilization rates at the lowest level in two years. Notably, BP’s 435,000 bbl/day Whiting refinery in Indiana and TotalEnergies’ 238,000 bbl/day refinery in Port Arthur, Texas, have been operating minimally or idled due to outages.
Oil markets continue to grapple with geopolitical concerns and fundamentals. Kpler analyst Matt Smith noted, “Deep refinery maintenance rolling on from the U.S. into Europe and then China in the coming months means if it weren’t for geopolitical tensions, prices would be lower.”
Front-month West Texas Intermediate crude (CL1:COM) for April delivery on Nymex settled at $78.61/bbl, while April Brent crude (CO1:COM) ended at $83.67/bbl. In contrast, March Nymex natural gas (NG1:COM) finished lower at $1.732/MMBtu, following a 12.5% surge on Wednesday.
Market analysts highlighted a spread of $0.75/bbl between front-month WTI crude futures and the second month, signaling a tightening market and pricing in a potential supply disruption in the near future from the Middle East or elsewhere.
Exchange-traded funds (ETFs) including NYSEARCA:USO, BNO, UCO, SCO, USL, DRIP, GUSH, NRGU, USOI, UNG, BOIL, KOLD, FCG, and UNL are prominent players in this volatile market.