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The American Petroleum Institute (API) reported a staggeringly large draw of 11.19 million barrels of United States crude oil inventories for the week ending January 5, marking six large draws in as many weeks, according to the API data. Analysts, had expected a much smaller drawdown of 3.89 million barrels in crude oil.
Last week, the American Petroleum Institute (API) reported a large draw of 4.992 million barrels of crude oil, along with an increase in gasoline inventories of 1.87 million barrels.
This week, the API is reporting another build in gasoline inventories of 4.338 million barrels for the week ending January 5. Analysts had expected a smaller, 2.625-million-barrel build.
WTI and Brent soared to three-year highs on Tuesday before the data on the expectation that crude oil inventories would decline yet another week, along with EIA’s updated forecast for oil demand growth that shows an increase over previous figures of 100,000 bpd.
WTI was trading up 2.33% (+$1.44) at $63.17 at 1:51pm EST. The Brent benchmark was trading up 1.76% (+$1.19) at $68.97. Still analysts are cautious of its long-term prospects as US shale is expected to continue to eat away at OPEC’s production cut efforts as prices rise, although that caution appears to be weakening somewhat as prices continue to hold.
Distillate inventories also saw a build this week of 4.685 million barrels, against a forecast of a 1.464-million-barrel build.
Inventories at the Cushing, Oklahoma, site decreased by 2.516 million barrels this week.
Related: Is An Oil Price Correction Overdue?
The continued drop in US crude oil inventories comes as the United States continues to ramp up production, hitting the second highest production level of 2017 in the last week of December of 9.782 million bpd.
The U.S. Energy Information Administration report on oil inventories is due to be released on Wednesday at 10:30a.m. EDT.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.