Oil Prices Head Higher After API Reports Crude Inventory Draw

The American Petroleum Institute (API) reported a draw of 1.047 million barrels of United States crude oil inventories for the week ending April 13, largely in line with analysts who had anticipated a draw in crude oil inventories of 1.429 million barrels.

Last week, the American Petroleum Institute (API) reported surprise build of 1.758 million barrels of crude oil.

The API reported a draw for gasoline inventories as well for week ending April 13, in the amount of of 2.473 million—a surprise given the small 227,000-barrel draw that analysts had expected.

Neither benchmark saw much activity earlier on Tuesday, with a mixed bag of small ups and downs. The WTI benchmark was trading up by $0.05 (+0.08%) at $66.27—less than $0.50 over last week’s prices, while Brent traded down $0.07 (-0.10%) at $71.35—almost even with last week’s prices at 2:30 pm EST. Brent was trading up earlier in the day, as high as $71.64.

Oil prices are in a tug of war with geopolitical risk premium courtesy of the Syrian conflict and Venezuelan production declines on one side, and US crude oil production and EIA forecasts of drilling productivity on the other.

Yesterday, the Energy Information Administration said in its monthly Drilling Productivity Report that U.S. shale production is expected to increase by 125,000 bpd in May over April, with the Permian production surging by 73,000 bpd, Eagle Ford’s—by 24,000 bpd, and the Bakken’s by 15,000 bpd.

And while forecasts of US production are grim, actual US crude oil production is even more grim, which for the week ending April 6 increased to 10.525 million bpd—a continuance of weeks and weeks of production gains.

Distillate inventories saw another draw this week of 854,000 barrels. Analysts had forecast a slightly smaller decline of 268,000 barrels.

Inventories at the Cushing, Oklahoma, site rounded out this week’s draws, with the API reporting a 1.015-million-barrel draw.

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

By 4:37pm EST, the WTI benchmark was trading up 0.36% on the day to $66.46 while Brent was trading up 0.15% at $71.53.

By Julianne Geiger for Oilprice.com

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