Oil Markets Recoil As Inventory Builds More Than Feared

The American Petroleum Institute (API) reported a build of 4.529 million barrels in United States crude oil inventories against expert predictions that domestic supplies would see only a 2-million-barrel build.

Oil prices had already fallen earlier on Tuesday in anticipation of a build. At 2:43pm EST, WTI was trading down 1.27% at $48.29 per barrel, with Brent down 1.14% at $51.03 per barrel. For WTI, this is about $.10 lower than Tuesday last week, with Brent prices $.54 down from last week. Both figures With potentially high inventories looming large again this week, neither benchmark was as receptive to OPEC hints that the production cut may be extended beyond June, with some fearing as much as a 2.8-million-barrel build.

The chart below shows that the API is still showing an overall build over the previous 12 weeks of 39.142 million barrels.

Cumulative changes in crude oil stocks since Jan 4, 2017

This week's actual build of 4.52 million will press downward on prices, which were already at November lows prior to data release.

The market didn't see any relief from the inventories at the Cushing, Oklahoma, facility this week either, which also increased-to the tune of almost 2 million barrels (+1.968MM)-on top of last week's 2.06-million-barrel build.

But things weren't all doom and gloom this week as far as inventories are concerned. Things were looking up for gasoline, as inventories for this fuel fell yet again, this time by 4.934 million barrels, after last week's 3.875-million-barrel draw.

Distillates stocks also saw a modest draw of 883,000 barrels, adding onto multiple weeks of draws for this fuel as well.

By Julianne Geiger for Oilprice.com

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