Oil prices dropped early on Wednesday after the API reported on Tuesday a surprise U.S. crude build that outweighed earlier bullish news of a coup attempt in Venezuela and Saudi Arabia hinting that the OPEC+ pact could be extended in some form through the end of this year.
As of 08:58 EDT on Wednesday, before the EIA weekly inventory report, WTI Crude was down 0.75 percent at $63.43 while Brent Crude traded down 0.33 percent at $71.82.
Oil rallied early on Tuesday after Saudi Arabia's Energy Minister Khalid al-Falih said in an interview with Russian news agency RIA Novosti that the OPEC+ production cut deal could be extended by the end of the year from its current expiry date of June 2019. Al-Falih, however, reiterated that it's too early to project details about production levels and quotas.
Also on Tuesday, oil prices were supported by the escalation of the situation in OPEC member Venezuela, where the opposition leader Juan Guaidó, along with some factions of the military, staged an attempted to overthrow Nicolas Maduro.
These two bullish factors were wiped out later in the day on Tuesday, when the American Petroleum Institute (API) reported a surprise build in crude oil inventory of 6.81 million barrels for the week ending April 26, coming in over analyst expectations of a 2.093-million-barrel buildup in inventories.
"The bigger-than-expected stock build has weighed on the market, which saw a reversal of much of yesterday's gains following comments from the Saudi oil minister that OPEC+ could continue with their deal through until the end of this year, whilst the market also largely ignored the growing unrest in Venezuela," Warren Patterson, Head of Commodities Strategy at ING, said on Wednesday.
Referring to Venezuela, ING believes that "While a change in regime could mean increased oil output in the longer term, it could also mean short- to medium-term disruptions, while we believe it will not be a quick fix to turn the state of the domestic oil industry around even with a new regime."
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More