Brent rises on smaller-than-expected US crude stock build and China optimism

Front-month ICE Brent has gained by $0.40/bbl on the day, to $84.45/bbl at 09.00 GMT.

PHOTO: Brent crude price chart. Getty Images

Upward pressure:

Commercial US crude inventories grew by 1.16 million bbls on the week, to 480.2 million bbls on 24 February, according to the US Energy Information Administration (EIA) data released yesterday. The weekly stock build fell short of the 6.2 million-build estimated by the American Petroleum Institute (API).

US gasoline stocks have declined for the second consecutive week, which may signal a demand recovery. On the contrary, distillate stocks – which are largely made up of diesel and gasoil – grew to a yearly high.

Stronger Chinese manufacturing activity data for February has bolstered Brent. The market awaits further signals of a Chinese oil demand recovery from the upcoming Chinese annual parliament meeting, ANZ commodities strategist Daniel Hynes says. The government is expected to announce its 2023 economic growth target, along with measures to boost economic growth, Reuters reports.

Downward pressure:

Indian refineries processed a total of 22.8 million mt (5.39 million b/d) of crude in January, about 5% higher than a year earlier, according to a monthly report released by the Indian petroleum ministry. The country’s total crude oil imports in January increased by nearly 4% on the year to 20 million mt (4.72 million b/d).

US Federal Reserve’s Atlanta president Raphael Bostic has advocated that the central bank should raise its key interest rate to a level in the 5-5.25% range, up from a current range of 4.50-4.75%. Hawkish comments from Bostic have increased concerns of more interest rate hikes, Saxo Bank says.

By Nithin Chandran

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