Oil Prices Dip Despite Production Cut Hopes as Unexpected Inventory Build Emerges

U.S. crude oil inventories unexpectedly surged, pushing oil prices lower despite anticipation of extended production cuts by OPEC+.

• The American Petroleum Institute (API) reported a significant rise of 8.428 million barrels for the week ending February 23, following a previous increase of 7.168 million barrels.
• This unexpected build comes amidst reports suggesting OPEC+ may extend production cuts into the next quarter, potentially even until the end of the year.
• Despite the positive news on production cuts, oil prices fell. Brent crude rose slightly to $83.39 per barrel, while WTI crude reached $78.63 per barrel, representing marginal increases compared to the previous week.

While crude oil inventories rose, the report offered some positive signs:

• Gasoline inventories decreased by 3.272 million barrels, following a modest increase the prior week.
• Distillate inventories also declined by 523,000 barrels, on top of a previous drop of 2.908 million barrels.

However, concerns remain as both gasoline and distillate inventories sit below the five-year average for this time of year. Additionally, stockpiles at Cushing, Oklahoma, a key storage hub, continued to rise, reaching their highest level since May 2023.

Overall, the report paints a mixed picture for the oil market. While hopes for extended production cuts offer some support, the unexpected inventory build and concerns over rising stockpiles are putting downward pressure on oil prices.