U.S. crude oil inventories increased by 5.8 million barrels, according to this week's American Petroleum Institute (API) inventory report published on Tuesday afternoon, compounded by large builds-again-in both gasoline and distillates.
Analysts were anticipating a crude oil inventory build of 3.06 million barrels, according to Market Realist.
Oil prices have found themselves being used like a rope in a desperate game of tug of war for weeks-on one side, there is good news from OPEC regarding their production cut adherence. On the other is the news that US drillers are adding rigs, and API and EIA inventory builds for weeks.
While OPEC has reportedly cut 1 million barrels per day of production in January, Baker Hughes reported a 15 oil rig increase last Friday, which followed a massive 29 oil rig increase the week prior.
Prior to the API's data release, Brent crude had traded up about $.50 since Friday's rig count release. Brent crude was trading at $55.62 ($55.05 on Friday), while WTI crude traded at $52.82 ($52,76 on Friday).
The API reported a 2.9-million-barrel build in gasoline inventories, and a 2.3-million-barrel build to distillates.
Supplies at the Cushing, Oklahoma, facility fell this week by 906,000 barrels.
Last weeks' EIA report showed a crude oil inventory build of 2.8 million barrels, which came a day after the API reported a 2.93-million-barrel build; and a 6.8-million-barrel build to gasoline compared with a 4.85-million-barrel build reported by the API.
While the two reports often are in disagreement, both figures carry weight similar to OPEC updates and US rig counts. Tomorrow's inventory report by the EIA will determine whether the industry body will continue the pressure on prices by reaffirming today's inventory builds as reported by the API-and if so, to what degree.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More