Oil Plunges After API Reports Significant Distillates, Crude Build

This week’s report from the American Petroleum Institute (API) estimates a 942,000 barrel build in U.S. crude supplies, in line with expectations.

S&P Global Platts polled analysts, leading to the prediction that crude supplies would rise by 600,000 barrels for the week ending August 26th.

The API predicted a 1.6-million barrel draw in domestic natural gas supplies. Distillates rose by three million barrels, according to API figures, despite forecasts saying supplies would remain unchanged.

Oil prices fell for a second straight day on Tuesday, due to worries about an extended oil supply glut and the strength of the American dollar in currency markets.

Brent crude futures declined by 89 cents, or 1.8 per cent, and settled at $48.37 per barrel.

U.S. West Texas Intermediate (WTI) crude futures fell 63 cents, or 1.3 per cent, and closed at $46.35.

Last week, the API report estimated that crude supplies would rise by 4.464 million barrels, despite expert consensus that inventories would drop by 0.5 million, according to a Reuters survey.

However, last Wednesday, the Energy Information Administration (EIA) reported a 2.5-million-barrel increase in crude oil inventories for the week ending August 19th, following a draw of the same amount reported by the authority in the week prior. Total inventories stood at 523.6 million barrels last week--still at record-high levels for August.

Data from the API and the EIA are often contrasting, which adds to the volatility of the market, especially amid other developments such as the coming OPEC meeting in September where a production freeze will be discussed.

By Zainab Calcuttawala for Oilprice.com

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