Higher US stockpiles, stronger dollar hit oil prices| MENAFN.COM

Saturday, 22 January 2022 05:38 GMT

Higher US stockpiles, stronger dollar hit oil prices

(MENAFN- AFP) Oil prices slid Thursday on a jump in US petroleum stockpiles and the surge in the US dollar spurred by the European Central Bank's launch of a massive eurozone stimulus.

US benchmark West Texas Intermediate (WTI) for delivery in March slid $1.47 to close at $46.31 a barrel.

Brent North Sea crude for March, the European benchmark, settled at $48.52 a barrel in London, down 51 cents from Wednesday's closing level.

The latest news from the US Department of Energy was bearish. The DoE reported Thursday that crude stockpiles in the world's largest oil consumer jumped by 10.1 million barrels last week, about four times as much as analysts had expected.

Inventories were up 13.3 percent from a year ago, and at a peak not seen in at least 80 years for this time of year.

The closely watched stockpiles at the Cushing, Oklahoma storage hub, which serve as a reference point for WTI, rose by 2.9 million barrels to 36.8 million. Refineries braked production, with the capacity utilization rate falling to 85.5 percent from 91.0 percent the prior week.

"The combination of the ECB and the inventories put pressure" on the oil market, said Phil Flynn of Price Futures Group, who added it was the largest week-over-week increase in crude supplies since 2001.

Oil prices also bore the brunt of a sharply rising dollar against the euro after the ECB said it would inject more than 1.0 trillion euros of stimulus into the stagnant eurozone economy.

The pledge by ECB chief Mario Draghi for the bank to buy 60 billion euros ($69 billion) of bonds per month through at least September 2016 was more aggressive than the 50 billion euro pace many investors expected.

The large-scale program, known as quantitative easing, was launched after eurozone inflation turned negative in December, stoking fears that the 19-nation eurozone is on the brink of a dangerous deflationary spiral of falling prices.

The euro dived to $1.1363, its lowest level since September 2003, after trading at $1.1607 late Wednesday.

A stronger greenback makes dollar-priced commodities more expensive for buyers using weaker currencies.

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