Oil prices traded lower after the Energy Information Administration (EIA) reported a higher than expected buildup of US crude inventories. Stock rose by 7 million, but the report was mixed as gasoline inventories fell by 7.7 million barrels. West Texas Intermediate fell after the report was released, but Brent continues to gain as OPEC cuts are forging ahead with an additional 534,000 daily barrel cut in March.
Supply disruptions have added to the OPEC+ pressure leading oil prices higher. US sanctions against Venezuela and Iran are combining with the military situation in Libya. US production has risen but for now the supply side is making a stronger push towards rebalancing of the market.
Russian comments this week on taking a more cautious approach to committing to an extension of the production cut agreement could tip the scale.
Energy prices will remain sensitive to demand fundamentals with an eye on how trade negotiations evolve. With the US-China deal closing in on an agreement, the US is now amping up disputes with Mexico and the European Union. The global growth downgrade this week by the IMF is another warning of the impact a trade war could have on the world’s demand for energy.