Oil Prices Rally Despite Another Inventory Build

The American Petroleum Institute (API) estimated on Tuesday another large crude oil inventory build, of 8.440 million barrels for the week ending May 1 as the demand destruction continues and storage space nears its upper limits.

Today's inventory build was expected to be 8.125 million barrels.

In the previous week, the API estimated a large build in crude oil inventories of 9.978 million barrels, while the EIA's estimates were for a slightly smaller build of 9.0 million barrels for that week.

Oil prices were trading up on Tuesday afternoon prior to the API's data release, as the market starts to muster up hope that OPEC production cuts that were supposed to go into effect on May 1 will combine with increased oil demand on the global front, which Goldman Sachs suggests has risen by 2.5 million barrels per day from its 2020 low point in mid-April. Along with lower supplies expected out of OPEC, the United States is seeing its own drop in production, from 13.1 million bpd at its height to 12.1 million bpd for April 24, according to the Energy Information Administration.

At 12:14 pm EDT on Tuesday the WTI benchmark was trading up on the day by $3.22 (+14.14%) at $26-double the price from this time last week. The price of a Brent barrel was also trading up on Tuesday, by $3.29 (+12.10%), at $30.49-up roughly $10 per barrel week on week.

The API reported a draw of 2.237 million barrels of gasoline for week ending May 1, after last week's 1.108-million-barrel draw. This week's build compares to analyst expectations for a 325,000-barrel build for the week.

Distillate inventories were up by 6.143 million barrels for the week, compared to last week's 5.462-barrel build, while Cushing inventories saw a gain of 2.681 million barrels.

At 4:33 pm EDT, WTI was trading at $24.60 while Brent was trading at $31.11.

By Julianne Geiger for Oilprice.com

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