Oil futures lost their grip on early gains Wednesday, drifting lower after government data showed a sharp rise in crude inventories, albeit accompanied by a drop in product stocks.
Remarks by Russia’s deputy prime minister, Alexander Novak, highlighting worries about producers outside of OPEC+ raising output and stealing market share also contributed to the softer tone, analysts said.
West Texas Intermediate crude for April delivery CL.1,
Novak warned of the possibility of lost market share in a televised meeting with Prime Minister Vladimir Putin, news reports said. Novak also said Russia would boost April production by 890,000 barrels a day relative to its output in May 2020.
Oil gave up gains as Novak “reminded energy traders that Russia is focused on market share and doesn’t need oil prices to be much higher,” said Edward Moya, senior market analyst at Oanda, in a note.
The Energy Information Administration reported Wednesday that U.S. crude inventories rose by 13.8 million barrels for the week ended March 5. That followed a hefty 21.6 million-barrel climb the week before as domestic refinery activity continues to recover from mid-February winter storms in Texas.
On average, analysts polled by S&P Global Plats forecast a climb of 2.7 million barrels for crude stocks. The American Petroleum Institute on Tuesday reported a 12.8 million-barrel climb.
“Last week’s record build has been followed by another chunky jump higher by U.S. crude inventories, as production has rebounded back to pre-storm levels while refinery runs struggle to recover,” said Matt Smith, director of commodity research at ClipperData.
“Once again we have seen significant dents to product inventories — and particularly to gasoline — offsetting the bearish influence of the crude build,” he said in emailed commentary.
The EIA data also showed crude stocks at the Cushing, Okla., storage hub climbed by 500,000 barrels for the week, while total domestic production rose 900,000 barrels to 10.9 million barrels per day.
Gasoline supply was down 11.9 million barrels, while distillate stockpiles were 5.5 million barrels lower for the week, according to the EIA. The S&P Global Platts survey had forecast supply declines of 4.8 million barrels for gasoline and 3.8 million barrels for distillate inventories.
Also Wednesday, Reuters reported that Saudi Arabia has yet to meet its pledge to cut its own production by one million barrels a day in February and March. Oil flows from the kingdom as monitored by two companies that track oil flows, Petro-Logistics and Kpler, suggest a smaller decline in February, the news report said.
April natural gas NGJ21,