Oil Drops On Huge Unexpected Crude Inventory Build

Crude oil inventories rose by 14.865 million barrels, American Petroleum Institute (API) data showed on Tuesday, as refining activity begins to return to normal following previous weather-related shutdowns.

U.S. crude inventories increased 13 million barrels over the course of 2022, according to API data, while crude stored in the nation’s Strategic Petroleum Reserves sunk by 221 million barrels.

The large build in commercial crude oil inventories comes as the Department of Energy released 0.8 million barrels from the Strategic Petroleum Reserves in the week ending January 6, leaving the SPR with just 371.6 million barrels. The SPR now contains the least amount of crude oil since early December 1983. It also comes are refiners were still working to restart refineries after cold-induced shutdowns.

Oil prices were relatively flat on Tuesday as traders take a wait-and-see attitude with upcoming rate hikes. At 2:48 p.m. EST, WTI was trading up $0.54 (0.72%) on the day to $75.17 per barrel. This is a weekly increase of roughly $2 per barrel. Brent crude was trading up $0.48(0.60%) on the day at $80.13—a weekly increase of just over $2 per barrel.

U.S. crude oil production rose to 12.1 million bpd in the final week of the year, bringing the total production increase for 2022 to 400,000 bpd , and 1 million bpd lower than peak production seen in March 2020.

WTI was trading at $74.86 shortly after the data release.

By Julianne Geiger for Oilprice.com

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