#Futures Movers: Oil prices stay on track to settle at 1-year high after modest weekly decline in U.S. crude inventories

In a statement, the committee acknowledged Saudi Arabia’s “significant additional voluntary supply adjustment” that took effect on Feb. 1 and will run through March. In January, the Saudis pledged to unilaterally cut its own output by 1 million barrels per day to offset higher production from Russia and Kazakhstan.

“Saudi Arabia, the defacto leader of the group has taken the reigns and committed to reducing their own output significantly enough to bolster the entire global market,” Tyler Richey, co-editor at Sevens Report Research, told marketWatch. “Without their decision to do so, it is hard to believe oil would be trading where it is with all other fundamental factors remaining constant.”

The committee Wednesday also noted that overall conformity with original production cut adjustments was at 101%. Since April, OPEC+ has lowered output by a cumulative 2.1 billion barrels, it said.

West Texas Intermediate crude for March delivery
CL.1,
+2.05%

CLH21,
+2.05%
rose $1.30, or 2.4%, to $56.06 a barrel on the New York Mercantile Exchange. Front-month contract prices were looking to post another finish at the highest since January 2020.

April Brent crude
BRN00,
+1.79%

BRNJ21,
+1.79%,
the global benchmark, was up $1.32, or 2.3%, to $58.78 a barrel on ICE Futures Europe, poised to settle at their highest since late February of last year.

The Energy Information Administration reported Wednesday that U.S. crude inventories fell by 1 million barrels for the week ended Jan. 29. That was less than the average decline of 2.4 million barrels forecast by analysts polled by S&P Global Platts.

“Oil inventories eked out a minor draw, buoyed by a huge bounce in imports,” said Matt Smith, director of commodity research at ClipperData. “A robust rebound in Canadian flows, as well as stronger waterborne imports into the U.S. Gulf Coast after fog lifted, helped offset ongoing strength in crude exports.”

The American Petroleum Institute on Tuesday reported a 4.3 million-barrel decline.

The EIA data also showed crude stocks at the Cushing, Okla., storage hub edged down by 1.5 million barrels for the week.

Gasoline supply, meanwhile, climbed by 4.5 million barrels, while distillate stockpiles were unchanged for the week. The S&P Global Platts survey had forecast a supply increase of 1.5 million barrels for gasoline and a decline of 1.3 million barrels for distillate inventories.

“Refinery runs ticked lower but weaker implied product demand led to a large build to gasoline,” said Smith.   

On Nymex, March gasoline
RBH21,
+1.63%
added 2.3% to $1.6525 a gallon and March heating oil
HOH21,
+1.00%
rose 1.7% to $1.7028 a gallon.

Natural-gas futures moved lower ahead of Thursday’s weekly EIA update on supplies of the fuel. March natural gas
NGH21,
-2.95%
traded at $2.798 per million British thermal units, down by nearly 1.7%.

Meanwhile, optimism around a push for another round of pandemic relief from Washington was “putting a bid in all risk assets, including crude oil,” said Robert Yawger, director of energy futures at Mizuho Securities, in a note.

President Joe Biden has called for a $1.9 trillion package, while a group of 10 Republican senators this week countered with a proposal for a roughly $600 billion package. The Senate on Tuesday voted 50-49 to open a debate on budget resolution for the 2021 fiscal year, a move that paves the way for much of Biden’s stimulus package to become law without the need for any Republican support.

“Last week it was looking as if there might not be enough support for a stimulus program. Now there is basically a $600 billion stimulus call in the market, with 10 Republicans and 50 Democrats enough to pass,” Yawger said. “Further negotiations should be able to increase that amount…in my opinion to around $1.4 trillion.”