WTI rises despite increasing US inventories

The Western Texas Intermediate crude prices advance more than 2%, trimming its Wednesday losses that were mainly the result of the stronger US dollar. US stockpiles have increased the most since 2021, as reported by the US Energy Information Agency. The US crude is trading at $75.43 at the time of writing versus the previous closing price at $73.85 per barrel on Wednesday. Brent crude gained $1.50 and is trading at $81.83 per barrel.

Market sentiment shifted sour as the dollar extended its gains, capping oil’s rally. The US Dollar Index advances 0.24%, up at 104.752 for the third consecutive day, bolstered by the Fed’s latest monetary policy minutes.

On Wednesday, FOMC minutes revealed details of Fed’s latest meeting which tended to be hawkish, with policymakers agreeing to raise rates 25 bps, while few members wanted a 50 bps hike. Fed officials acknowledged the labour market’s tightness and warranted further increases to curb elevated inflation.

US Energy Information Administration’s data on Thursday showed that oil inventories surged to their highest level since May 2021. Crude oil stockpiles grew by 7.6 million barrels to 479 in the last week ending February 17, 2023. Meanwhile, inventories in Cushing, Oklahoma, jumped to 40.4 million, the highest level since June 2021.

WTI retreated on the data release, though Russia’s intention to reduce its oil exports from western ports in March by as much as 25% reignited fears of an oil shortage. Consequently, WTI and Brent’s prices have jumped.

The US Department of Labour revealed that unemployment claims continued downward, while the US economy grew at a 2.7% pace quarterly in Q4 2022, lower than the 2.9% previous reading. The dollar rallied on the data and weighed on WTI, which retreated from daily highs around $75.92.