The American Petroleum Institute (API) reported a surprise crude oil inventory draw this week, of 1.545 million barrels for the week ending November 16. The draw this week was the first week that saw a draw after six weeks of straight builds as reported by the API, which had weighed on oil prices under the combined weight of disappointing Iranian sanctions results combined with growing U.S. stockpiles.
The report was in contrast to analyst expectations that we would see a build in crude oil inventories of 2.941 million barrels.
Inventories in the Cushing, Oklahoma facility this week had climbed by 398,000 barrels, while analysts had estimated a bigger build of 2.419 million this week.
Prices fell sharply on Tuesday prior to the data release as the market braced for another inventory build, holding onto a sliver of hope that OPEC would offer up some production cut plan prior to its December meeting. Oil prices have not fared well in recent weeks not only due to the inventory builds, but also due to demand forecasts that have been adjusted downward for a couple months in a row.
At 3:30 pm EST, WTI was trading down 6.82% (-$3.90) at $53.30—nearly $4 per barrel lower than this time last week. The Brent crude benchmark was trading down 6.63% (-$4.43) at $62.36, a roughly $5 per barrel decline week on week.
The API reported a build in gasoline inventories for week ending November 16 in the amount of 706,000 barrels. Analysts had predicted a draw of 198,000 barrels for the week.
U.S. crude oil production as estimated by the Energy Information Administration was also bearish in nature, showing that production for the week ending November 9 stood 11.7 million bpd—a brand new high for the United States for a second week in a row.
Distillate inventories were down by 1.832 million barrels, compared to an expected draw of 2.754 million bpd.
The U.S. Energy Information Administration report on crude oil inventories is due to be released on Wednesday at 10:30a.m. EST.
By 4:42pm EST, WTI was trading down for the day at $53.20 and Brent was trading down at $62.25.
By Julianne Geiger for Oilprice.com
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