Oil futures fell Tuesday, with analysts noting that nearby futures on U.S. benchmark crude have slumped below later-dated contracts, reflecting concerns over a buildup in inventories after last month’s Texas deep freeze.
West Texas Intermediate crude for April delivery CL.1,
“A bearish contango structure for WTI is not surprising many given the strong build [in inventories] over the past couple of weeks,” said Edward Moya, senior market analyst at Oanda, in a note.
May Brent crude BRN00,
The Energy Information Administration reported last week 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 continued to recover from mid-February winter storms in Texas.
Crude futures shook off the rising inventories previously, aided by strong falls in gasoline and other products. But analysts said the size of the buildup, a persistently firmer tone for the U.S. dollar, a troubled vaccine rollout in Europe and jitters over the potential for COVID-19 variants to cause problems in the U.S. were sufficient to cool a crude rally that still sees both WTI and Brent up more than 30% year-to-date.
“The crude demand outlook still remains the key for higher prices and if short-term risks continue to grow due to virus variants, oil prices could be in for modest 10% pullback,” Moya said.
