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Oil Prices Rise As API Reports Surprise Crude, Gasoline Draws

The American Petroleum Institute (API) reported a surprise draw this week for crude oil of 1.770 million barrels, while analysts predicted a build of 333,000 barrels. U.S. crude inventories have grown by roughly 21 million barrels so far this year, according to API data, while the U.S. Strategic Petroleum Reserves fell by nearly eight times that figure.

The draw comes even as the Department of Energy released 6.2 million barrels from the Strategic Petroleum Reserves in the week ending September 30 that left the SPR with 416.4 million barrels.

In the week prior, the API reported a build in crude oil inventories of 4.150 million barrels after analysts had predicted a small build of 333,000 barrels.

WTI rose on Tuesday prior to the data release. At 2:28 p.m. ET, WTI was trading up $3.15 (+3.77%) on the day at $86.78 per barrel—up nearly $9 per barrel on the week (after a $7 per barrel slide in the week prior). Brent crude was trading up $3.13 (+3.52%) on the day at $91.99—a more than $6 increase on the week that more than erased the previous week’s $5 decrease. Crude oil prices continued to rise throughout the afternoon, with a flurry of OPEC+ chatter detailing just how much crude oil production the group could decide to cut for December. The most recent report figure suggests the group could be contemplating a cut up to 2 million bpd.

U.S. crude oil production data continues to be a concern, if not for U.S. drivers who would be unlikely to see much immediate relief from increased oil production, then certainly from the Biden Administration, who has spearheaded the SPR releases to bring down gasoline prices ahead of midterm elections. For the week ending September 23, U.S. crude oil production slipped to 12.0 million bpd, according to the latest weekly EIA data. This is just a 300,000 bpd rise from the levels seen at the start of the year, and still a 1.1 million bpd shortfall seen at the start of the pandemic.

The API also reported a draw in gasoline inventories this week, of 3.474 million barrels for the week ending September 30, adding onto the previous week's 1.048 million-barrel draw. 

Distillate stocks rounded out the week’s draws with a loss of 4.046 million barrels compared to last week's 438,000-barrel increase. 

Cushing inventories were up by 925,000 barrels in the week to September 30. In the week prior, the API saw a Cushing increase of 357,000 barrels. Official EIA Cushing inventory for the week ending September 23 was 25.683 million barrels, up from 24.991 million barrels in the prior week.

By Julianne Geiger for Oilprice.com

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