Oil futures faced a slight downward trend early on Wednesday, as traders expressed uncertainty over the demand outlook. The market eagerly awaits official data on U.S. crude inventories and continues to monitor the impact of cold weather on production in North Dakota and other regions.
- West Texas Intermediate (WTI) crude for March delivery fell by 23 cents, or 0.3%, to $74.14 a barrel on the New York Mercantile Exchange.
- March Brent crude, the global benchmark, declined by 30 cents, or 0.4%, to $79.25 a barrel on ICE Futures Europe.
Factors Driving the Market
Late Tuesday, the American Petroleum Institute reported that U.S. crude inventories decreased by 6.7 million barrels last week, while gasoline inventories saw an increase of 7.2 million barrels. Distillate inventories dropped by approximately 250,000 barrels.
While the decrease in crude oil inventories was seen as positive, analysts remained concerned about the significant rise in gasoline stocks and its potential impact on demand. Strategists at ING characterized the crude oil figure as "largely constructive" in a recent note.
Later today, the Energy Information Administration will release its closely-followed inventory data. According to analysts surveyed by S&P Global Commodity Insights, crude inventories are expected to show a decrease of 3 million barrels for the week ending January 19. Meanwhile, gasoline inventories are anticipated to show an increase of 1 million barrels.
The same survey also revealed that analysts predict a decline in U.S. crude production, with estimates suggesting a decrease of 900,000 barrels per day to a total of 12.4 million barrels per day. This projection accounts for the extreme cold weather conditions and operational challenges that have caused output shutdowns, particularly in North Dakota and Texas.
Note: For more information on oil trade, refer to "Oil Traders Care More About North Dakota Weather than Red Sea Missile Attacks."
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