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The American Petroleum Institute (API) has reported a major surprise build of 5.321 million barrels of U.S. crude oil inventories for the week ending March 23, with the market expected to respond by erasing last week’s gains.
Analysts had been expecting little change after last week saw a surprise draw.
This week’s API data also show a 1.655-million crude inventory build at Cushing, but gasoline and distillates saw a big draw.
The API reported a gasoline draw of 5,799 million barrels, and a distillate draw of 2.23 million barrels.
Last week, the API reported a surprise draw of 2.739 million barrels of United States crude oil inventories for the week ending March 16, defying analyst expectations of a build of the same amount.
Oil prices, which had enjoyed a boost to a two-month last week on geopolitical risk levels, were already refocusing on crude inventory data by Tuesday morning, losing some gains as commodities sector weaknesses trumped potential supply disruptions.
The general consensus, though, was that prices were slipping on profit-taking, as traders collected on last week’s upward momentum ahead of API data.
Both benchmarks had lost some of last week’s gains by afternoon trading on Tuesday, ahead of the API, with the WTI benchmark down by $0.87 (-1.33%) to $64.68, and Brent trading down $0.61 (-0.88%) at $68.91 at 4:04 pm EST.
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The U.S. Energy Information Administration report on oil inventories is due to be released on Wednesday at 10:30a.m. EST.
This week’s inventory data comes amid increasingly bullish talk from key analysts who view Big Oil as entering its “Golden Age”: a ‘restraint’ phase of backwardation, cost deflation and consolidation. They point to impressive EPS earnings for oil and gas companies who have been generating higher profits at depressed oil prices than they were when oil was at $100 per barrel.
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.