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Surprise Crude Build Sends Oil Prices Lower

The American Petroleum Institute (API) reported on Tuesday a build in crude oil inventories of 2.70 million barrels for the week ending December 18.

Analysts had predicted an inventory draw of 3.135 million barrels for the week.

In the previous week, the API reported a build in oil inventories of 1.973-million barrels, after analysts had predicted a draw of 1.937 million barrels.

Both Brent and WTI were down on Tuesday afternoon before the data release, despite earlier vaccine optimism and a new stimulus package that was approved in the United States. Dragging on oil prices is a new strain of Covid-19 that caused massive border closures throughout the world in an effort to contain the spread of the mutated strain.

In the run-up to Tuesday's data release, at 2:15 p.m. EDT, WTI had fallen by $0.78 (-1.63%) to $47.19, down $.30 per barrel on the week. The Brent crude benchmark had fallen on the day $0.62 at that time (+1.22%) to $50.29—down nearly $0.40 per barrel on the week.

U.S. oil production fell to 11.0 million bpd for the week ending December 11, according to the Energy Information Administration—2.1 million bpd lower than the all-time high of 13.1 million bpd reached in March.

The API reported a small draw in gasoline inventories of 224,000 barrels of gasoline for the week ending December 18—compared to the previous week's 828,000-barrel build. Analysts had expected a 1.210-million-barrel build for the week.

Distillate inventories were up by 1.03 million barrels for the week, compared to last week's 4.762-million-barrel increase, while Cushing inventories rose this week by 341,000 barrels.

At 4:33 p.m. EDT, the WTI benchmark was trading at $46.92, while Brent crude was trading at $49.98 as the latter slipped below $50.

By Julianne Geiger for Oilprice.com

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