Colossal Crude Oil Inventory Draw Carries Prices Higher   

The American Petroleum Institute (API) has estimated a staggering crude oil inventory draw of 11.1 million barrels for the week ending Aug 22, compared to analyst expectations of a 2.112-million barrel draw.

The inventory draw this week adds onto last week’s draw in crude oil inventories of 3.45 million barrels, according to API data. The EIA estimated that week that there was an inventory draw of 2.7 million barrels.

After today’s inventory move, the net draw for the year is 19.08 million barrels for the 35-week reporting period so far, using API data.

Oil prices were trading up on Tuesday prior to the data release despite the appearance that the United States could be softening its stance on the Iranian nuclear deal and the subsequent oil exports that would be unleashed on the market in the rather unlikely event that the Iran vs. the West showdown wrap up in quick form. It also ignored news from China that it would seek to increase its domestic demand for products to weather the tariffs imposed by US strong-arming, indicating China’s future unwillingness to give up ground in the trade talks.

At 3:42pm EST, WTI was trading up $1.33 (+2.48%) at $54.97, or about $1.25 down from this time last week. Brent was trading up $0.89 (+1.53%) at $59.01--$1.10 down from last week’s levels.  

The API this week reported a 349,000-barrel draw in gasoline inventories for week ending Aug 22. Analysts predicted a draw in gasoline inventories of 388,000 barrels for the week.

Distillate inventories fell by 2.5 million barrels for the week, while inventories at Cushing fell by 2.4 million barrels.

US crude oil production as estimated by the Energy Information Administration showed that production for the week ending August 15 stayed the same at 12.3 million bpd, just 100,000 bpd off the all-time high of 12.4 million bpd.

The U.S. Energy Information Administration report on crude oil inventories is due to be released at its regularly scheduled time on Wednesday at 10:30a.m. EST.

By Julianne Geiger for Oilprice.com

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