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The American Petroleum Institute (API) has reported a sizable draw on U.S. crude oil inventories, down 7.4 million barrels over the previous week—a much larger draw that expected, and the fifth draw in seven weeks.
Analysts expected a draw of around 1.7-2.2 million barrels for the week, and right ahead of the API data dump, oil prices responded upwards nearly 2 percent, in anticipation of a draw on a smaller scale.
Last week, the Energy Information Administration (EIA) showed a build of 4.25 million barrels of crude.
This week’s 7.4-million-barrel draw is the biggest draw since September.
It’s not all good news, though. On the flip side of this, gasoline and distillates experienced massive stockpile builds—the biggest in a year.
Gasoline saw a 4.25-million build, against an expected build of only 1 million barrels. Distillates stockpiles were up even more—reporting a 5.24-million-barrel build.
At Cushing, crude oil inventories were up, but less than expected, with a 482,000-barrel build, against the anticipated 900,000-barrel build.
Crude oil prices would have responded more wildly to the massive draw-down in inventory, however, the huge builds in gas and distillates negatively offset this picture.
Tuesday saw oil prices crash again, then slightly recover at the open of trading today and then dipping once again until climbing back up right before and after the API crude inventory data release. Just before the API release, West Texas Intermediate (WTI) was around US$53.20. Immediately after the release, WTI was at US$53.36 and Brent was at US$56.49.
Oil prices were also responding to increasing news indicating that the top oil exporters in the world not cheat on output cuts promised in the 30 November OPEC deal.
By Charles Kennedy of Oilprice.com
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Charles is a writer for Oilprice.com