Oil Prices Little Changed as Market Weighs U.S. Inventories
Oil prices were little changed on Thursday, with investors weighing expectations for strong winter fuel demand against a big build in fuel inventories in the U.S., the world’s largest oil user, and macroeconomic concerns.
Brent crude futures were down 6 cents at $76.1 a barrel by 0727 GMT. U.S. West Texas Intermediate crude futures were down 5 cents at $73.27.
Both benchmarks fell more than 1% on Wednesday as a stronger dollar and a larger-than-expected rise in U.S. fuel inventories weighed on prices.
“The oil market is still grappling with opposing forces – seasonal demand to support gains and macro data that support a stronger U.S. dollar in the medium term… which could be a cap to prevent further gains,” said Kelvin Wong, senior market analyst at OANDA.
JPMorgan analysts expect January oil demand to rise by 1.4 million barrels per day year-on-year to 101.4 million barrels per day, driven mainly by “increased heating fuel use in the Northern Hemisphere.”
“Global oil demand is expected to remain strong throughout January, driven by colder-than-usual winter conditions that boosted heating fuel consumption, as well as an earlier start to travel in China for the Lunar New Year holiday,” the analysts said.
The market structure in Brent futures also suggests that traders are becoming more concerned about tightening supplies at the same time as demand is picking up.
The premium for the first-month Brent contract over the six-month contract hit its widest since August on Wednesday. This widening of backwardation, when futures for immediate delivery are higher than those for later delivery, typically indicates either supply is decreasing or demand is increasing.
Source: Investing.com
