Crude Spikes After API Reports Massive Crude Draw

The American Petroleum Institute reported a 7.5 million barrel draw in U.S. crude oil supplies on Tuesday, instead of the build that many expected.

American crude inventories were slated to increase by 2.3 million barrels over the past week, according to a survey by Reuters, and 2.8 million barrels were expected to be added according to S&P Global Platts. Zero Hedge’s sources had anticipated an even bigger 3.25 million barrel build.

Gasoline supplies declined by 2.5 million barrels, surpassing forecasts of a 1.4 million barrel draw. Zero Hedge attributed the draw to the 250,000-gallon leak in Helena, Alabama, which caused severe gasoline supply shortages along the East Coast. The pipeline’s holding company completed construction on a bypass line on Tuesday and told shippers to expect supplies starting tomorrow.

Distillate inventories rose by 1.4 million barrels, marking six weeks of consecutive increases.

Last week, EIA reported that U.S. crude oil inventories fell 600,000 barrels, after the biggest inventory draw of the century in the week prior, which was a 14.5 million barrel draw.

Tuesday’s API report will either be validated or discredited by the U.S. Energy Information Administration's official crude supplies report Wednesday morning.

Brent futures were down 0.30 percent or 14 cents at $45.80 a barrel one hour before the API report was released. Similarly, West Texas Intermediate futures were down by half a percent or 23 cents at $45.63 a barrel. Nearly 50 minutes after reporting, WTI was trading up 1.3% at $44.43 and Brent up 0.39% at $46.13. Gasoline was down 2.96% at 1.3788.

Zero Hedge noted that barrel prices are expected to remain “rangebound” until the Organization of Petroleum Exporting Countries’ unofficial meeting in Algiers next week, which many are hoping will end with some sort of agreement to curb OPEC’s crude oil production.

By Zainab Calcuttawala for Oilprice.com

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