Oil Slumps After API Reports Surprise Crude Build

The American Petroleum Institute (API) reported a surprise crude oil inventory build of 3.66 million barrels of United States crude oil inventories for the week ending August 11, compared to analyst expectations that this week would see a draw in crude oil inventories of 2.499 million barrels.

Last week, the American Petroleum Institute (API) reported a draw of 6 million barrels of crude oil.

The API reported a draw in gasoline inventories for week ending August 11 in the amount of 1.56 million barrels. Analysts predicted a smaller draw of 583,000 barrels.

Oil prices were trading down earlier on Tuesday, but had rallied in the afternoon prior to the release of the API data on inventories. At 2:18pm EDT, WTI was trading up 0.18% (+$0.12) at $67.32 per barrel, with Brent crude trading up 0.23% (+$0.17) at $72.78 per barrel. The price fluctuations of the day were likely caused by early Saudi Arabia reports that it had curbed output instead of increasing it as was expected, increased tensions between Turkey and the United States, and reports of multiple unsold crude oil cargoes around the Atlantic Basin, with producers including Russia and Nigeria cutting oil prices for certain grades. OPEC’s MOMR published yesterday also painted a picture of diminishing oil demand growth rates, muddying the waters still, as traders work to interpret the multiple catalysts.

US crude oil production—yet another catalyst—as estimated by the Energy Information Administration dipped to 10.8 million bpd for the week ending August 3, coming off the psychologically important high of 11 million bpd from a few weeks ago.

Distillate inventories were also up this week—by 1.94 million barrels, compared to an expected build of 964,000 barrels. Inventories at the Cushing, Oklahoma site increased this week by 1.64 million barrels.

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

By 4:39pm EDT, WTI was trading at $67.18 and Brent was trading at $72.57.

By Julianne Geiger for Oilprice.com

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