The U.S. rig count continues…
Oil prices spiked on Monday…
Adding another shock to the already volatile market in contradiction of analyst expectations, the American Petroleum Institute (API) is reporting a significant increase today in its weekly U.S. crude inventory report of 2.09 million barrels, following a volatile day of trading.
Markets will also be responding to the API’s report of a 3.9-million-barrel drop in gasoline stockpiles and a 1.5-million-barrel draw for distillates.
Analysts are expecting that the Energy Information Administration (EIA) will report a 1.0-million-barrel drop in U.S. crude oil inventories when it releases its official weekly data on Wednesday, but the API data lends greater uncertainty to these forecasts.
Last week, the official U.S. crude oil inventory report showed an unexpected rise in crude stockpiles by 1.4 million barrels, while analysts had expected the opposite.
The day before the official figures last week, the API reported a 1.3-million-barrel draw in crude oil supplies.
API and EIA data have frequently been contradictory in recent months.
West Texas Intermediate (WTI) was at US$42.77 at the time of writing, while Brent was at US$45.03 per barrel.
Oil prices fell Tuesday after government forecasters raised their U.S. domestic production outlook and the initial optimism faded over news of another OPEC meeting next month.
Crude oil futures are now down around 15 percent from mid-June, when we hit $50 and sparked a slight revival in production in the U.S.
Ahead of the API and EIA data, analysts were also predicting that gasoline inventories would be down by 1.2 million barrels.
In its short-term energy outlook, the EIA said it expected a smaller decline of 700,000 bpd in crude oil production in the U.S. for this year, down from its earlier forecast of an 820,000 bpd decline due to increased drilling activities.
By Charles Kennedy of Oilprice.com
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Charles is a writer for Oilprice.com