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U.S. crude stocks jump, but 'one-off' adjustment cited
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OPEC and IEA raise forecasts for 2023 oil demand growth
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U.S. dollar rises to near 6-week high against other
currencies
(Adds latest prices)
By Scott DiSavino
NEW YORK, Feb 15 (Reuters) -
Oil futures were flat to lower on Wednesday as the U.S. dollar strengthened and investors worried that rising interest rates would slow the economy and cut fuel demand. Oil's losses were limited as the market discounted a big build in U.S. crude stocks due to a data adjustment and as the
International Energy Agency (IEA) forecast higher global oil demand growth. Brent futures slid 20 cents, or 0.2%, to $85.38 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 47 cents, or 0.6%, to $78.59. The U.S. dollar rose to a near six-week high against a currency basket on strong U.S. retail sales data last month and recent U.S. inflation data, suggesting the Federal Reserve (Fed) will keep monetary policy tight. "Crude prices are under pressure as the dollar rallies following impressive economic data that paves the way for more Fed tightening," said Edward Moya, senior market analyst at data and analytics firm OANDA.
A stronger dollar can cut oil demand, making crude more expensive for holders of other currencies.
Federal Reserve officials said the U.S. central bank will
need to maintain gradual interest rate increases to fight
inflation. Investors worry higher rates could slow the economy.
U.S. crude stockpiles jumped by 16.3 million barrels last
week to 471.4 million barrels, their highest since June 2021,
the U.S. Energy Information Administration (EIA) said.
That was much bigger than the 1.2 million-barrel increase
analysts forecast in a Reuters poll. But analysts said an unusually large crude oil
supply adjustment contributed to the outsized build.
"Once everyone realized the adjustment threw off the EIA
data, scepticism about the big (crude storage) build crept into
the market," said John Kilduff, a partner at investment advisory
Again Capital LLC in New York. "It's a one-off."
The IEA raised its forecast for 2023 oil demand growth and
said there could be a supply deficit in the second half due to
restrained production from OPEC+, the Organization of the
Petroleum Exporting Countries (OPEC) and other oil suppliers
including Russia.
The IEA said China will make up nearly half of this year's
oil demand growth after it relaxed its COVID-19 curbs, and also
said about 1 million bpd of production from Russia will be shut
in by the end of the first quarter, citing a European ban on
seaborne imports and a Group of Seven (G7) price cap.
The G7 group of wealthy countries includes Canada, France,
Germany, Italy, Japan, Britain and the United States.
On Tuesday, OPEC also raised its projection for global oil
demand growth and pointed to a tighter market in 2023.
(Additional reporting by Alex Lawler in London, Laila Kearney
in New York and Muyu Xu in Singapore; Editing by Marguerita
Choy, Mike Harrison and David Gregorio)
