This week's American Petroleum Institution (API) report showed the second consecutive week of crude inventory draws that exceeded expert predictions.
The report estimates a 2.21 million barrel drop in inventories, as opposed to the 1.37 million barrel decline expected by industry insiders.
Meanwhile, the API estimates that supplies at the Cushing, Oklahoma, storage facility have risen by a massive 4.01 million barrels, as opposed to the 2.87 million unit rise that was forecasted-the largest build at the Cushing facility since 2008.
There was instant reaction for West Texas Intermediate (WTI) prices that brought barrel prices up roughly 10 cents after the report was released, but within 45 minutes, prices had dipped $0.88 from its opening mark, likely focused on the colossal Cushing inventory increase.
This week's API report also showed that distillates also grew by a hefty 4.08 million barrels, surpassing the more conservative expectation of a 1.24-million-barrel build.
Last week, the API report came in just one day before the Organization of Petroleum Exporting Countries' (OPEC) official meeting in Vienna - where the cartel's members finalized the terms of a freeze deal to reduce the supply glut tanking oil prices. That report showed the largest build in Cushing since March 2015, along with a small draw in U.S. crude oil inventories.
The Energy Information Administration report from Wednesday last week reported an anticlimactic 900,000-barrel decline in U.S. commercial crude inventories, bringing the total to 488.1 million barrels, within the average for this time of year, though close to the upper limit.
The volatile response in the oil price market may be a sign that the industry is not completely satisfied with the OPEC deal, or with its pending negotiations with certain non-OPEC members later this week.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More
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