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The American Petroleum Institute (API) reported a surprise draw of 531,000 barrels in United States crude oil inventories against expert predictions that domestic supplies would see a small 3-million-barrel build, instilling hopes in the minds of weary oil traders that OPEC’s production cuts are not being entirely undone by U.S. shale drillers.
The chart below shows that the API is still showing an overall build over the previous 11 weeks of 34.6 million barrels.
(Click to enlarge)
Hours before the API data release, WTI and Brent benchmarks were both down, but within minutes of the data posting, began a significant rally of 50 cents per barrel—perhaps a bit overzealous given the modest draw in light of significant builds in weeks prior. At 4:49pm EST, WTI was trading down only .02 percent at $48.39 per barrel, with Brent actually trading up 0.43 percent at $51.57 per barrel.
Tempering today’s enthusiasm is the 2.06-million-barrel build in inventories at the Cushing, Oklahoma facility, adding to last week’s 788,000-barrel draw.
Gasoline inventories were down by 3.875 million barrels, adding to last week’s optimism for the fuel after the largest draw since April 2014. A half hour after the data was released, gasoline was trading up 1.25 percent at $1.6005, but still less than post-API reporting last week, when it was trading at $1.6855.
Distillates stocks also saw a draw of 4.07 million barrels, compounding last week’s draw of 2.9 million barrels.
Earlier on Tuesday, markets trembled when OPEC’s Monthly Oil Market Report showed that according to self-reported figures, Saudi Arabia had eased up on the production cuts and produced 10.011 million barrels per day in February—263,300 barrels per day over January levels—a figure that suggests that Saudi Arabia may be unwilling to shoulder the bulk of the production cuts without the corresponding reward of higher prices.
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.