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Oil Falls Further On Huge Inventory Build

The American Petroleum Institute (API) estimated on Tuesday a large crude oil inventory build of 10.485 million barrels for the week ending March 28, as 75% of Americans remain under lockdown in some form or another.

Today’s inventory move was expected to be for a much smaller build of 3.997-million-barrels.

In the previous week, the API estimated a surprise draw in crude oil inventories of 1.247-million barrels, while the EIA’s estimates were more bearish, reporting a build of 1.6 million barrels for the week.

Oil prices were mixed on Tuesday afternoon prior to the API’s data release as the United States settles in for a longer period of social distancing and more states implementing lockdown orders. Meanwhile, traders are still holding onto a smidgeon of hope that there will be some relief coming in the form of a ceasefire to the oil price war between Saudi Arabia and Russia.  Further complicating prices are new national guidelines for how the United States will deal with the coronavirus going forward—a development that will impact the demand for crude.

At 3:24 pm EDT on Tuesday the WTI benchmark was trading up on the day by $0.35 (+1.74%) at $20.44. While up on the day, WTI is still trading down nearly $4 week on week for the second week in a row. The price of a Brent barrel, on the other hand, was trading down on Tuesday, by $0.20 (-0.76%), at $26.22—down by roughly $3 week on week.

The API reported a large build of 6.085 million barrels of gasoline for week ending March 27, after last week’s 2.622-million-barrel draw. This week’s build compares to analyst expectations for a 1.949-million-barrel build for the week.

Distillate inventories were down, by 4.458 million barrels for the week, compared to last week’s 1.90-million-barrel draw, while Cushing inventories rose by 2.926 million barrels.

­­

US crude oil production as estimated by the Energy Information Administration showed that production for the week ending March 20 slipped back slightly to 13.0 million bpd.

At 4:33 pm EDT, WTI was trading at $20.36 while Brent was trading at $26.17.

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By Julianne Geiger for Oilprice.com

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