WTI Falls After Large US Crude Stock Buildup

Oil prices traded lower after the Energy Information Administration (EIA) reported a higher than expected buildup of US crude inventories. Stock rose by 7 million, but the report was mixed as gasoline inventories fell by 7.7 million barrels. West Texas Intermediate fell after the report was released, but Brent continues to gain as OPEC cuts are forging ahead with an additional 534,000 daily barrel cut in March.

West Texas Intermediate graph

Supply disruptions have added to the OPEC+ pressure leading oil prices higher. US sanctions against Venezuela and Iran are combining with the military situation in Libya. US production has risen but for now the supply side is making a stronger push towards rebalancing of the market.

Russian comments this week on taking a more cautious approach to committing to an extension of the production cut agreement could tip the scale.

Brent crude graph

Energy prices will remain sensitive to demand fundamentals with an eye on how trade negotiations evolve. With the US-China deal closing in on an agreement, the US is now amping up disputes with Mexico and the European Union. The global growth downgrade this week by the IMF is another warning of the impact a trade war could have on the world’s demand for energy.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza