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Zainab Calcuttawala

Zainab Calcuttawala

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…

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Oil Spikes After API Reports Unusually Strong Draw To Crude Stocks

Mid continent rig

This week the American Petroleum Institute reported a “shockingly” high draw of 7.6 million barrels of oil despite expert predictions that U.S. supplies would increase by 1.5 million units in the wake of multiple draw weeks, according to Zero Hedge.

The report marks five straight weeks of draws in a season that is typically marked with lower demand and consequential supply builds. The news caused West Texas Intermediate prices to spike above $49 shortly after the numbers were released.

Gasoline supplies, on the other hand, jumped by two million barrels—a more lukewarm build than the expected 500,000.

Supplies at Cushing, Oklahoma, rose by 400,000 barrels – a staggering four times more than the 100,000-barrel increase that analysts had anticipated would be announced today.

Cushing oil supplies hit a 10 month low last week, offering some hope for WTI prices.

Oil futures climbed after the report for the week ending on 30 September was released on Tuesday, according to Market Watch.

"Demand is rising," Phil Flynn, senior market analyst at Price Futures Group said. "We are seeing the U.S. market get in balance a lot quicker than anyone thought."

Tomorrow’s Energy Information Administration (EIA) report will either confirm or deny the veracity of the API’s forecasts, and the twain seldom agree.

Last week, crude oil markets got a boost of optimism from the EIA, when the agency reported a 1.9-million-barrel decline in commercial crude inventories to a total of 502.7 million barrels. Despite the decline—and multiple weeks of decline— the agency again noted that the size of inventories continues to be unusually high for the season.

At the time of writing, West Texas Intermediate traded at $49.19 and Brent stood at $51.31.

By Zainab Calcuttawala for Oilprice.com

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  • Awolz on October 04 2016 said:
    A (42 gal) barrel of oil makes on average 15.5 gallons of fuel (averaged diesel/unleaded). A build of 2million barrels of gas would mean 5.4 million of the oil draw came from gas production, which is 5.8 with Cushing. So 1.3MM draw during a hurricane limiting port access. Much less of a drop in the bucket compared to current historic stock levels, plus everyone producing more, no in effect cut for two months, and China is about to shut off intake for SPR.
  • Taimein on October 04 2016 said:
    Yes the American reserves are going down ,now bring the oil in thats setting on the ocean so we know how much we actually have ,they should pay for the shipment when it leaves
  • kr55 on October 04 2016 said:
    "Supplies at Cushing, Oklahoma, rose by 400,000 barrels – a staggering four times more than the 100,000-barrel increase that analysts had anticipated would be announced today."

    Had a chuckle at that sentence. Imagine if analysts predicted a 1 barrel build. The 400k build would have been a mind blowing 400,000 times higher than expected! Or 0 barrels build, the 400k build would have been infinity times more! :)

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