Commodity Market Update: Oil slips after large US crude stock build

Oil prices eased in early trade on Thursday after a data showed that U.S. crude inventories jumped much more than expected, raising concerns about demand in the world's largest economy.

Brent crude futures fell 34 cents, or 0.4 per cent, to $81.26 a barrel at 0135 GMT, while U.S. West Texas Intermediate crude futures declined 36 cents, or 0.5 per cent, to $76.28 a barrel.

Both contracts lost more than $1 a barrel on Wednesday, pressured by the rise in U.S. crude inventories, as refining dropped to its lowest levels since December 2022.

The Energy Information Administration (EIA) said U.S. crude inventories jumped by 12 million barrels to 439.5 million barrels in the week to Feb. 9, far exceeding analysts' expectations in a Reuters poll for a 2.6 million-barrel rise.

However, the EIA data also showed that gasoline and distillate stocks fell more than forecast. Gasoline stocks fell by 3.7 million barrels to 247.3 million barrels versus expectations for a 1.2 million-barrel draw.​

Distillate stockpiles declined by 1.9 million barrels to 125.7 million barrels, compared with expectations for a 1.6 million-barrel drop.

On the supply side, Kazakhstan said it will compensate for its oil overproduction in January within the next four months, in line with its OPEC+ commitments. Iraq also said it will review its oil production and address any excess output above its OPEC+ voluntary cuts in the coming four months, if found.

"This comes ahead of OPEC's March meeting, where the group plans to decide whether to extend supply curbs into the second quarter," said ANZ analysts in a note on Thursday, referring to the Organization of the Petroleum Exporting Countries.

"Any signs that extension looks unlikely would weigh on sentiment across the oil market."