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The American Petroleum Institute (API) reported a healthy draw of 4.2 million barrels in United States crude oil inventories, compared to analyst expectations that markets would see a bit of relief with a crude oil draw of 2.2 million barrels for the week ending April 28.
Gasoline inventories fell by 1.9 million barrels, according to the API. Crude oil draw or no, gasoline inventories are still a worry. While crude oil has experienced an overall drawdown over the last couple of weeks, gasoline inventories have been on the rise. While a 1.9-milllion barrel draw is a bit of a relief, it comes after the API reported a 4.4-million-barrel build for the fuel last week. A day later, the EIA reported it was a 3.37-million-barrel build.
Still, it’s not as bad as what analysts were predicting for gasoline this week—a 1-million-barrel build for gasoline.
The rebalancing act between crude oil and gasoline inventories is the result of refiners taking advantage of the plentiful—and cheap—crude oil. So while US crude oil is indeed drawing down—albeit not enough—it’s simply being refined, and accumulating.
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According to the EIA, gasoline inventories have climbed almost 5 million barrels in the last two weeks ending April 21.
Distillate inventories fell this week by 436,000 barrels, and inventories at the Cushing, Oklahoma site feel by 215,000 barrels.
This week’s API report comes as oil prices fell to new lows earlier today, as hedge fund and money managers raced to exit their bullish positions in record numbers as US futures slipped below last week’s low earlier in the day. Over 50,000 US contracts traded within five minutes after prices dipped below that line, as markets grow increasingly skeptical that the stubborn oil inventories will soon give way. Further pressing on prices was the news that Libyan production—which is exempt from the OPEC production agreement—came back online and Friday’s rig count that showed US shale drillers are still putting more rigs into play.
Related: Oil Prices Head Lower As Libyan Production Rebounds
At 3:40pm EST, WTI was trading down over 2% on the day, well below the $50 mark at $47.59. Brent Crude was trading at $50.38. Brent Crude hit a low early on Tuesday of $50.14—the lowest point this year.
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Gasoline was trading down at $1.51 at 3:40pm EST—down 10 cents or almost 7% from last Tuesday.
By 4:50pm EST, both WTI and Brent Crude had picked up slightly and were trading at $47.96 and $50.79 respectively.
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.