Massive Crude Build Pressures Oil Prices

Crude oil inventories rose by an impressive 10.507 million barrels last week, the American Petroleum Institute (API) data showed on Tuesday.

U.S. crude inventories increased a total of 13 million barrels last year, according to API data, while crude stored in the nation’s Strategic Petroleum Reserves sunk by 221 million barrels. This week, SPR inventory held steady for the fifth week in a row at 371.6 million barrels—the lowest amount of crude oil in the SPR since December 1983. But the Biden Administration this week announced there would be further releases from the SPR in the amount of 26 million barrels.

Oil prices traded about 1.24% down on Tuesday in the runup to the data release. At 3:58 p.m. EST, WTI was trading down $0.99 (-1.24%) on the day to $79.15 per barrel, but up nearly $2 per barrel from this time last week. Brent crude was trading down $0.96 (-1.11%) on the day at $85.65 $83.96—a weekly increase of about $1.50 per barrel.

U.S. crude oil production rose 100,000 bpd to 12.3 million bpd for week ending February 3—the highest production rate since last April 2020. U.S. production is still 800,000 bpd lower than the peak production seen in March 2020.

WTI was trading at $79.14 shortly after the data release.

Gasoline inventories rose by 846,000 barrels after last week’s API data showed the fuel inventories rising by 5.261 million barrels. Distillates rose 1.728 million barrels after rising by 1.109 million bpd in the week prior.

Inventories at Cushing, Oklahoma, increased by 1.954 million barrels on top of the 178,000 barrel hike reported last week.

By Julianne Geiger for Oilprice.com

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