The American Petroleum Institute (API) estimated on Tuesday shocked the oil markets with a large crude build of 8.42 million barrels for the week ending June 5.
Analysts had predicted a small inventory draw of 1.738 million barrels.
WTI was trading up on Tuesday afternoon prior to the API's data release after falling on Monday when it was announced that OPEC would extend its production cuts for a single month-but that the extra voluntary cuts that the group had cut in May would not be part of the extension.
Oil production in the United States has now fallen from 13.1 million bpd on March 13 to 11.2 million bpd for May 29, according to the Energy Information Administration-a drop of 1.9 million bpd-significantly more than OPEC's production cut agreement from last year and the ninth straight drop for U.S. oil production.
At 3:27 pm EDT on Tuesday the WTI benchmark was trading up on the day by $0.76 (+1.99%) at $38.95. The price of a Brent barrel was trading up on Tuesday as well, by $0.40 (+0.98%), at $41.20-that's up less than $2 per barrel from last week's levels.
The API reported a draw of 2.913 million barrels of gasoline for week ending June 5-compared to last week's 1.706-barrel build. This week's draw compares to analyst expectations for a 71,000-barrel build for the week.
Distillate inventories were up by 4.271 million barrels for the week, compared to last week's 5.917-million-barrel build, while Cushing inventories saw a draw of 2.28 million barrels.
At 4:46 pm EDT, WTI was trading at $38.57 while Brent was trading at $40.83.
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