US crude stockpiles rise in line with expectations, EIA data reveals

Oil prices rallied on Wednesday as government data showed US crude stockpiles rose in line with analysts’ expectations.

Crude stocks increased 3.9m barrels to a total 521.9m barrels in the week to 4 March, according to the Energy Information Administration.

Total motor gasoline stockpiles fell 4.5m barrels and distillate fuel stocks dropped 1.1m barrels.

Production figures were broadly unchanged.

“Oil inventories were up again, while production flatlined, but markets opted to just look at the drawdown in gasoline stockpiles,” IG’s senior market analyst Chris Beauchamp said of the positive reaction in global equities.

“Cherry picking of data has long been a theme in stock markets, but now commodities appear to be playing along too.”

At 1610 GMT, Brent crude was up 2.6% to $40.75 per barrel and West Texas Intermediate gained 3.2% to $37.72 per barrel.

Global producers of oil, including members and non-members of the Organization of the Petroleum Exporting Countries, plan to meet in Moscow on 20 March to discuss an output freeze amid concerns that a supply glut is driving prices lower, an Iraqi oil official told state newspaper Al-Sabah.

Oil prices have regained strength by 25% since mid-February when Saudi Arabia, Qatar, Venezuela and non-OPEC exporter Russia said they would leave supply at January’s levels if there was enough support from other producers.

However, Goldman Sachs on Tuesday said the recent surge in commodity prices was not sustainable and the rout was not over.

“In the current supply-driven market, demand hasn’t really changed, it takes lower prices to push and keep supply below demand to create a deficit. As a result, higher prices are much harder to sustain in a supply-driven market since supply is primed to return with higher prices,” the bank said.