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After the much-awaited news regarding U.S. sanctions on Iran today, the American Petroleum Institute (API) reported a draw of 1.85 million barrels to the U.S. crude oil inventories for the week ending May 4, compared to analyst expectations that this week would see a smaller draw in crude oil inventories of 719,000 barrels.
Last week, the American Petroleum Institute (API) reported a large build of 3.427 million barrels of crude oil.
The API also reported a draw in gasoline inventories for week ending May 4, to the tune of 2.055 million barrels—a bigger draw than the 450,000-barrel draw that analysts had expected.
Oil prices fell early on Tuesday as the market waited for U.S. President Donald Trump to render his decision on the Iran nuclear deal at 2:00pm. At 07:21 a.m. EDT on Tuesday, WTI Crude was down 1.37 percent at $69.76 and Brent Crude was down 1.13 percent at $75.31. Both benchmarks were at that time about $2 over last week’s figures.
The wait is now over with President Trump announcing this afternoon that the United States will withdraw from the deal, largely in line with what most had expected.
“Over the past few months, we have engaged extensively with our allies and partners around the world, including France, Germany, and the United Kingdom. We have also consulted with our friends from across the Middle East. We are unified in our understanding of the threat and in our conviction that Iran must never acquire a nuclear weapon. After these consultations, it is clear to me that we cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement. The Iran deal is defective at its core. If we do nothing, we know exactly what will happen. In just a short period of time, the world’s leading state sponsor of terror will be on the cusp of acquiring the world’s most dangerous weapon. Therefore, I am announcing today that the United States will withdraw from the Iran Nuclear Deal.”
Post-announcement, at 3:17pm EDT, oil prices started to regain ground, but were still trading down on the day.
U.S. crude oil production for the week ending April 27—the most recent data available—increased to 10.619 million bpd, according to the EIA.
Distillate inventories saw a huge draw this week of 6.674 million barrels. Analysts had forecast a much smaller decline of 1.375 million barrels.
Inventories at the Cushing, Oklahoma, site was the only build this week, with the API reporting a 1.653-million barrel build.
The U.S. Energy Information Administration report on oil inventories is due to be released on Wednesday at 10:30a.m. EST.
By 4:38pm EST, the WTI benchmark was trading down 1.44 percent on the day to $69.71 while Brent was trading down 0.68 percent at $75.65.
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.