Oil Markets Whipsawed As API Reports Unexpected Crude Build

The American Petroleum Institute (API) reported a build of 897,000 barrels in United States crude oil inventories, compared to analyst expectations that markets would see a bit of relief with a crude oil draw of 1.6 million barrels.

The API's report on gasoline inventories-a 4.4-million-barrel build, hit markets even harder, which follows a blow last week when the markets were shocked when gasoline inventories saw a build of 1.374 million barrels, while analysts were expecting a 2.2-million-barrel draw for the fuel instead.

Last week, the API reported a 840,000-barrel draw for crude oil inventories for week ending April 7, while the EIA reported a 1-million-barrel draw.

While the API and EIA crude oil inventory reports seldom match barrel-for-barrel, and sometimes even contradict each other on a significant level in any given week, the trendlines of the builds or draws since the beginning of 2017 tell roughly the same picture, and the story goes like this:

2017 started with a substantial dip in inventories, but the trend quickly reversed, and began its upward climb that lasted for the next ten weeks. The last month or so has seen those inventories level off, and while the market may not be pacified with the rate at which crude oil supplies are diminishing-or holding steady-they at least appear to no longer be building like they did in February and March.

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Distillates saw a small draw of 36,000 this week, compared after a 1.8-million-barrel draw last week.

Inventory at the Cushing, Oklahoma, site fell 2 million barrels this week, following a smaller draw last week of 672,000 barrels.

Oil prices rose slightly on Tuesday from their one-month-low on Monday as markets looked forward to a small but much-needed drawdown in crude stocks. At 2:30PM EST, WTI was trading up 0.49% or $0.24, at $49.47. Brent Crude was trading up 0.74% or $0.38, at $51.98. Meanwhile, gasoline was trading down .16% at $1.6188. All benchmarks had continued to climb through 4:30PM EST.

Related: The Bullish Case For Oil Is Fading Fast

Although both crude oil benchmarks rose slightly from their opening positions, both benchmarks are trading down more than $3.00 per barrel on the week, in line with overarching sentiment that OPEC's production cuts will be insufficient in curtailing inventories and therefore insufficient in propping up prices. Gasoline has fallen $.10 on the week.

This week's build in crude oil inventories is the tenth build in the last seventeen weeks, using API data, with the API still reporting an overall hefty build over that time period of roughly 37.9 million barrels.

Shortly after data release, WTI had slipped back to $49.45, and gasoline had fallen to $1.607. By 4:52PM EST, Brent Crude had fallen to $52.00.

By Julianne Geiger for Oilprice.com

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