The American Petroleum Institute (API) has reported what very well may be the fifth week in a row of a draw in U.S. oil inventories of 752,000 barrels, in dramatic contradiction to an expected build of around 3 million barrels.
For the past three weeks, major draws on crude oil inventories have helped to offset increased volumes that have added to the global supply glut from a resumption in Libyan exports and more Nigerian crude flowing, in addition to record production from Russia.
If the Energy Information Administration's (EIA) official figures due out tomorrow at 10:30am EST do not contradict the API report, we will be looking at the biggest drawdown in US crude supplies for a four-week period in three years.
Not only were U.S. crude oil inventories down 752,000 barrels, but distillates saw their first inventory draw in seven weeks, with a drop in inv¬entory of 343,000 barrels. Gasoline also saw a healthy 3.7-million-barrel draw.
Inventories at Cushing were down 832,000 barrels.
Last week, U.S. crude inventories fell by 6.2 million barrels to 504.6 million barrels, according to official EIA figures. The day before, the API had estimated that inventories had dropped by an unexpected 7.5 million barrels.
Similar to this week, analysts last week had also predicted a build of 2.3-2.8 million barrels, rather than a draw, bringing increased attention to the usefulness of speculating on analysts' expectations in this volatile market.
At the time of writing, West Texas Intermediate (WTI) as up 0.6% at US$44.94, while Brent crude was down 2.91%, at US$45.97.
By Charles Kennedy of Oilprice.com
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