Crude oil and palm oil prices fell after US oil inventories recovered

After a speculative rise in oil prices last week by 5%, quotes fell 2.5% yesterday on data on the recovery of oil inventories in the US, which led to lower prices of palm and soybean oil.

According to the EIA weekly report, during January 20-26, crude oil production in the US increased by 5.7% compared to the previous week to 13 million barrels/day, which is very slightly inferior to the record 13.3 million barrels/day. Crude oil inventories rose by 1.23 million barrels, 5.1% lower than the 5-year average, although traders had expected a decline of 1.1 million barrels. Gasoline inventories rose 1.16 million barrels to a 3-year high and 1.2% above the 5-year average.

March Brent oil futures fell 2.5% to $80.5/barrel yesterday (+1.6% for the week, +6% for the month), but they continue to be supported by tensions in the Middle East.

On Sunday, Iranian-backed militants attacked a US base in Jordan near the Syrian border with a drone, killing three US servicemen. The US government blamed the attack on Iranian proxies and promised a response. The Houthis continue to attack commercial vessels in the Red Sea and hit a tanker in the Strait of Aden carrying fuel with a missile.

Also, the oil market supports the reduction of stocks on floating storages. According to Vortexa, between January 19 and 26, the volume of crude oil stored on tankers that had been parked for at least a week fell by 18% to a 3.5-year low of 63.97 million barrels.

April palm oil futures on Bursa Malaysia are down for a third session in a row, and yesterday fell another 1.22% to 3,795 ringgit/t or $803/t (+2% on the month).

Declining oil and soybean prices are putting pressure on soybean oil prices, especially given the slowdown in exports.

According to surveyors, in January, Malaysia reduced the export of palm oil products by 6.7-9.4% to 1.23-1.28 million tons.

The most active soybean oil contract in Dalian yesterday fell by 1.29%, and palm oil fell by 2.59%.

Cheap oil makes palm oil unattractive to biofuel producers, which also negatively affects the prices of rapeseed and sunflower oil.