Oil Futures Plummet 2% as U.S. Stockpiles Rise


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures tumbled 2% Thursday (1/22) after the 
Energy Information Administration reported across-the-board increases in 
inventories of U.S. crude and refined products last week.

   An unwinding of geopolitical risks after U.S. President Donald Trump's walk 
back of threats to take Greenland by force also ended a prior four-session 
rally in oil. The president's remarks at the World Economic Forum in Davos, 
Switzerland on Wednesday (1/21) put to rest fears of U.S-led military action 
that would have risked decades of alliance with Europe and NATO.

   "We are back to counting barrels after the deflation in political risks and 
all signs are that we are oversupplied," said John Kilduff, partner at Again 
Capital, a New York energy hedge fund.

   U.S. commercial crude oil stocks at 426 million bbl rose by 3.6 million last 
week, adding to a prior weekly increase of 3.3 million, and stood 3.5% up 
year-over-year, according to EIA data released on Thursday -- a day later than 
usual -- due to the Martin Luther King Jr. holiday. 

   Gasoline balances also increased by 6 million bbl to 257 million, adding to 
a prior 9 million surplus. Distillate stocks climbed by 3.3 million bbl to 
132.6 million, after the previous week's slide of 100,000 bbl, the same EIA 
data for the week ended January 16 showed.

   Concerns about oil oversupply are at the fore of the market again after the 
Paris-based International Energy Agency reinforced its warning this week of a 
glut for this year, although it revised down the expected surplus by 100,000 
bpd to 3.7 million bpd.

   NYMEX WTI crude futures contract for March delivery settled down $1.26, or 
2.1%, at $59.36 bbl. The ICE Brent crude contract for March closed down $1.18, 
or 1.8%, at $64.06 bbl.

   Prior to Thursday's slide, the two crude benchmarks had risen about 3% each 
since the close of Friday. On a broader scale, crude futures had posted 
increases over the past four weeks.

   Among refined products, NYMEX ULSD futures for February delivery fell by 
$0.0655 to $2.3650 gallon, while front-month RBOB moved down by $0.0426 to 
$1.8369 gallon.

   The U.S. Dollar Index declined by 0.388 points to 98.175 against a basket of 
currencies.




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