EIA crude oil inventories increased much more than expected, and U.S. oil maintained a volatile climb in the short term

On Thursday (January 11) during the New York session, at 23:30 Beijing time, data released by the U.
S.
EIA showed that the increase in commercial crude oil inventories in the United States excluding strategic reserves in the week ended January 6 far exceeded expectations, refined oil inventories fell more than expected, and gasoline inventories increased more than expected
.
The increase in EIA crude oil inventories is basically consistent with API, so US crude oil prices maintained a volatile climb
in the short term after the EIA data was released.

EIA crude oil inventories increased much more than expected

Specific data show that the EIA crude oil inventory changes in the United States for the week ended January 6 actually increased by 18.
962 million barrels, an expected decrease of 224.
3 barrels, and an increase of 1.
694 million barrels
in the previous month.

In addition, EIA gasoline inventories in the United States for the week ended January 6 actually increased by 4.
114 million barrels versus an expected increase of 1.
186 million barrels; the previous value decreased by 346,000 barrels; the EIA refined oil inventories in the United States for the week ended January 6 actually decreased by 1.
069 million barrels, compared with an expected decrease of 472,000 barrels; and the previous value decreased by 1.
427 million barrels
.

According to the EIA report, EIA crude oil inventories in the United States recorded 18.
961 million barrels in the week to January 6, the largest since the week of February 6, 2021, and the US domestic crude oil production increased by 100,000 barrels to 12.
200 million barrels per day
in the week of January 06.
The four-week average supply of U.
S.
crude products was 19.
891 million b/d, down 4.
33%
from the same period last year.
U.
S.
crude oil exports fell by 2.
070 million b/d to 2.
137 million b/d
in the week of Jan 06.
U.
S.
Strategic Petroleum Reserve (SPR) inventories fell by 800,000 barrels, or 0.
21%, to 371.
6 million barrels in the week of January 06

The EIA report showed that commercial crude oil inventories, excluding strategic reserves, rose by 18.
961 million barrels, or 4.
51%,
to 440 million barrels.
U.
S.
commercial crude inventories excluding strategic reserves in the week ended Jan.
6 were the highest
since the week of Nov.
4, 2022.
In the week of January 06, the United States imported 6.
35 million b/d of commercial crude oil, excluding strategic reserves, an increase of 638,000 b/d
from the previous week.

EIA inventories in the United States for the week ended January 6 were the lowest since the week of December 2, 1983, according to the
EIA report.
U.
S.
crude oil exports for the week ended January 6 were the lowest
since the week of August 5, 2022.
Cushing crude inventories recorded their biggest increase since December 2021
.
U.
S.
refinery equipment utilization rose to its highest
level since September 2021 in the week to Jan.
6.

In addition, U.
S.
crude inventories increased, as did refined product inventories, indicating sluggish demand and putting pressure
on crude oil prices.
According to the latest data from the American Crude Oil Institute (API), in the week ended January 6, API crude oil inventories increased by 14.
865 million barrels to 420.
6 million barrels, up 3.
298 million barrels in the previous month and down 3.
475 million barrels expected, gasoline inventories increased by 510,000 barrels versus 1.
173 million barrels in the previous month and 1.
475 million barrels expected, refined oil inventories increased by 1.
09 million barrels from 2.
417 million barrels in the previous month and 125,000 barrels expected, and Cushing crude oil inventories decreased by 340,000 barrels from the previous value by 701,000 barrels
.

Stephen Innes, managing partner at SPI Asset Management, warned that oil traders "are unlikely to see the explosive economic restart
that oil bulls are hoping for.
" "We suspect that the significant crude oil inventories are further due to
the significant shutdown of some refineries.

The World Bank cut its global growth forecast, weighing on oil prices

The World Bank's Global Economic Prospects report released on Tuesday said the global economy is expected to grow by 1.
7 percent in 2023, well below the 3 percent
forecast in June.
U.
S.
GDP is expected to grow by 0.
5% in 2023, down from 2.
2% forecast in June; the weakest non-recessionary performance
since 1970.
Growth prospects are bleak
due to monetary tightening, slowdowns in the US, Eurozone, China, and spillovers from the war in Ukraine.
Eurozone GDP is expected to be flat in 2023 due to soaring energy costs and rising borrowing costs, compared with an expectation of 1.
9%
growth in June.
By 2024, investment in emerging market and developing economies is expected to grow at 3.
5 percent, half
the rate of the past 20 years.
China's growth slowed to 2.
7% in 2022 due to the coronavirus lockdown, but will pick up to 4.
3%
in 2023.

Markets have heightened fears
of a deeper global recession.
This has had a negative impact on crude oil demand and put pressure
on oil prices.

The EIA raised its crude oil demand forecast for this year and next, supporting oil prices

In its monthly short-term energy outlook report released on Tuesday, the EIA said global crude oil demand growth is expected to be 1.
05 million b/d in 2023, compared with 1 million b/d.
Global oil demand will reach 102.
2 million b/d in 2024, an increase of 1.
72 million b/d from 2023; U.
S.
crude oil production is expected to increase by 550,000 b/d in 2023, compared with a previous increase of 470,000 b/d; U.
S.
crude oil production is expected to increase by 400,000 b/d
in 2024.
Brent crude oil prices are expected to be $83.
10/barrel in 2023, compared to $92.
36/barrel previously; The price of Brent crude oil is expected to be $77.
57/barrel in 2024; WTI crude oil prices are expected to be $83.
10/b in 2023, compared to $86.
36/barrel previously; WTI crude oil prices are expected to be $77.
57/barrel
in 2024.

Goldman Sachs analysts pointed out in a note that growing oil demand may return the market to a situation of short supply from June, or push Brent prices to rebound to $105 / barrel by the fourth quarter, and also give OPEC room
to reverse its decision to cut production in October.
Goldman Sachs said global oil demand could grow by 2.
7 million b/d
year-on-year in 2023.

Geopolitical risks support oil prices

Russia will not comply with the so-called oil price restrictions
in any form.
The Russian Ministry of Energy said that Russia will respond to the caps set by Western countries on Russian energy prices, details of the corresponding decree will be published in the near future, and Russia will not comply with the so-called oil price restrictions
in any form.
The Russian Ministry of Energy does not rule out additional measures to limit discounts on Russian oil to a reasonable range
based on market prices.

The window for negotiations on the Iranian nuclear deal will not be open to the United States indefinitely, Iranian Foreign Ministry spokesman Kanani said at a regular press conference that the exchange of information is taking place
through different channels according to the common requirements of Iran and the United States.
Iran is ready to conclude negotiations while safeguarding its national interests, and Iran's position on this issue has always been clear
.
Kanani stressed that the United States is a party that violates the Iranian nuclear agreement, and the window for reaching a compliance agreement through diplomacy will not be open
to the United States indefinitely.

The Fed's hawkish tone in favor of the dollar is not good for oil prices

A stronger dollar has been detrimental to dollar-denominated oil prices
, sparked by hawkish comments from policymakers so far this week.

Speaking at an international symposium on central bank independence hosted by the Riksbank, Federal Open Market Committee (FOMC) Chairman Jerome Powell said the Fed's independence from political influence is crucial
to its ability to fight inflation.
That independence requires the Fed not to intervene on issues
such as climate change that go beyond Congressional authority.
We are not and will not be climate policymakers
.

The Fed must resist the temptation
to expand its scope to address other important social issues.
Taking on such goals weakens our independence
.
The Fed has little
responsibility for climate-related financial risks.
Without congressional law, we are not fit to use money or regulatory tools to promote a green economy
.
Nor are we well suited to using our tools to achieve other climate-based goals
.
Fed Chairman Jerome Powell, in a speech prepared for the Riksbank independence seminar, did not comment
on the current outlook for the U.
S.
economy or monetary policy.

San Francisco Fed President Daly noted that she expects interest rates to rise above
5% in 2023.
On the same day, Atlanta Fed President Bostic said policymakers should raise interest rates above 5 percent early in the second quarter and maintain them at that level
for the long term.
But after Fed Chairman Jerome Powell's comments, the dollar came under moderate selling pressure, limiting the dollar index rally to a high of 103.
49
.

For now, the market may focus on the US inflation data
released on Thursday.
Commerzbank FX analyst Antje Praefcke believes that the data is unlikely to be positive for the dollar
.
I worry that inflation in December will have to remain unchanged (expected to fall from 7.
1% to 6.
5%) before markets again believe that the Fed's forecast is more credible and the dollar is supported
.
In the current environment, any other scenario could further weaken the dollar
.