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Oil Traders Remain Bearish… For Now

Oil Traders Remain Bearish… For Now

The market seems too well…

Large Crude Build Weighs On Oil Rally

Oil storage

The American Petroleum Institute (API) reported a large surprise build in crude oil inventory of 8.6 million barrels for the week ending May 10, coming in significantly over analyst expectations of a 2.125-million-barrel drawdown in inventories.

Last week, the API reported a build in crude oil inventories of 2.81 million barrels. A day later, the EIA contradicted the API’s report, instead estimating a draw of 4-million-barrels.  

Including this week’s data, the net build is now 29.52 million barrels for the 20-week reporting period so far this year, using API data.

Oil prices rose sharply on Tuesday on multiple reports of turmoil in the Middle East, including attacks on four oil tankers off the Strait of Hormuz, and a drone attack of a Saudi pipeline—although this was tempered somewhat by the escalating China-US trade war.

WTI was trading up on Tuesday before the data release at $61.95, up $0.91 (+1.49%) on the day at 1:02pm, and up week on week. The Brent benchmark was also trading up on the day at $71.48, up $1.25 (+1.78%) at that time. The Brent benchmark was trading up roughly $2 week on week.

The API this week reported a build in gasoline inventories for week ending May 10 in the amount of 567,000 barrels. Analysts estimated a draw in gasoline inventories of 274,000 barrels for the week.

Distillates rose by 2.2 million barrels for the week, while inventories at Cushing rose by 2.1 million barrels.

US crude oil production as estimated by the Energy Information Administration showed that production for the week ending May 3—the latest information available—fell to 12.2 million bpd from the all-time high of 12.3 million bpd the week prior.

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

By 4:42pm EST, WTI was trading up at $61.67 and Brent was trading up at $71.19.

By Julianne Geiger for Oilprice.com

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