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Oil Pares Gains After API Reports Surprise Crude Inventory Build

Eagle Ford

The American Petroleum Institute (API) reported a surprise build of 4.755 million barrels of United States crude oil inventories for the week ending January 17, ending the streak of seven large draws in the previous seven weeks, according to the API data. Analysts had expected a drawdown of 1.6 million barrels in crude oil inventories.

Last week, the American Petroleum Institute (API) reported a huge draw of 5.121 million barrels of crude oil, along with an increase in gasoline inventories of 1.782 million barrels.

This week, the API is reporting another build in gasoline inventories of 4.117 million barrels for the week ending January 17. Analysts had expected a smaller 2.486-million-barrel build.

The WTI and Brent benchmarks both saw big gains on Tuesday as the IMF painted a rosy picture of the global economy for 2018 and 2019. At 3:27pm EST, WTI was trading up 1.75% (+$1.11) at $64.68. The Brent benchmark was trading up 1.52% ($1.05) at $70.08—the over-$70-threshhold being a significant psychological level to break through, and a new multi-year high for the closely watched international benchmark.

Distillate inventories saw a decrease this week of 1.280 million barrels, largely in line with the forecast for a 1.471-million-barrel decline.

Inventories at the Cushing, Oklahoma, site decreased by 3.572 million barrels this week.

While US crude oil inventories are up for the week, production for week ending January 12 is also up, coming in at 9.750 million bpd.

The U.S. Energy Information Administration report on oil inventories is due to be released on Wednesday at 10:30. EST.

By 4:35pm EST, the WTI benchmark was trading up 1.89% on the day to $64.77 while Brent was trading up 1.62% on the day at $70.15.

By Julianne Geiger for Oilprice.com

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  • Petrowatcher on January 26 2018 said:
    I have been getting news blasts from CNBC saying why oil will keep going higher,which I don’t believe to be true.
    But the reasoning they provide!!!!

    Due to OPEC cuts
    Due to strong demand globally
    Due to Nigeria unrest
    Due to Venezuela collapse
    Crude supplies drop x weeks in a row
    A pipeline has a crack in it
    Etc
    Etc

    Glad to find this site , I think it maybe speaks truth to power
  • Neo_Driller on January 23 2018 said:
    It is no surprise we saw a build. Past draws were due to lagged effect of supply events (intentional export cut to US by Saudi's, while Iraq compensated for lost Saudi's export, Iraq had to deal with Kurdish pipeline event, that suppressed its export to US in Nov and Dec). Least of all, if we think this is the beginning of a price correction, the onslaught is yet to begin when all geopolitical premiums vanish, refinery turnaround maintenance season kick-on along with lagging OPEC compliance in Jan, the peak of the correction should begin when Shale production rise in Feb and forward (with most of 2018 production volume hedged).
  • Mamdouh G Salameh on January 23 2018 said:
    Right on cue, the minute oil prices break through the $70/barrel, either the API or the EIA announce a few million barrels’ addition to the US crude oil and gasoline inventories. We should expect similar announcement tomorrow from the EIA.

    Despite the above, oil prices are heading upward beyond $70/barrel bolstered by the recent upgrade of global economic growth by the IMF from the original projection of 3.7% in 2018 to 3.9% in 2018 and also 2019. They are also bolstered by an understanding between Russia and Saudi Arabia for the continuation of the OPEC/non-OPEC production cut probably beyond 2018 with some adjustments to reflect rising oil prices and also almost re-balancing in the market.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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