The American Petroleum Institute (API) reported a larger than expected draw in commercial crude supplies in its Wednesday report.
Analysts expected a one-million-barrel draw overall, although the API reported a 5.042 million barrel decline in inventories.
"Following last week's surge in crude and product inventories, API reported a much bigger than expected drawdown in crude inventories ( versus -1mm expectations)," the economics blog said. "While this spiked WTI prices, they fell back amid massive builds in gasoline (9.75mm) and distillates."
Supplies at Cushing, Oklahoma declined twice as much as expected, with a one million barrel decrease in ready crude levels.
Gasoline inventories saw a significant 9.75 million barrel increase - almost as much as the one year high reported two weeks ago.
Distillates saw a 1.17 million barrel drop from last week's levels.
Last Tuesday, API showed a 1.5-million-barrel build in its data release. The crude inventory build sent oil prices downward, even though a modest 1.2 million barrel build had already been expected. Still, this is the first increase to crude inventories in over 8 weeks.
Oil prices slipped on Wednesday as oil markets ignored the brighter oil demand forecast reported by OPEC and instead focused on increases in U.S. shale oil production which could help offset OPEC's production cut. Together the bloc will limit output to 32.5 million barrels. And while some Non-OPEC producers pledged to cut output, they are not bound to reduce production accordingly.
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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