The American Petroleum Institute (API) reported a draw of 6.356 million barrels of United States crude oil inventories, against a survey of S&P Global Platts analysts that predicted an inventory drawdown of just 2.1 million barrels. Last week API had reported a more than 6-million-barrel build, so this week erases the ugly build API rang in last week.
Gasoline inventories, according to the API, also saw a build this week, of 869,000 barrels for the week ending November 17, close to the expected build of 1 million barrels.
All eyes may be on OPEC’s comings and goings in the next couple of weeks leading up to the meeting in Vienna that may determine the fate of the current OPEC oil production cut—but OPEC’s eyes are closely watching US crude oil inventories—the most transparent and visible oil inventory metric in the world—to determine the extent to which they must go to keep oil prices in check. Any large build in US crude oil and perhaps even gasoline inventories will likely pressure the cartel to do more “whatever it takes” to keep oil prices from tanking on oversupply fears. This week’s news of a big draw for crude oil might be good news for oil prices momentarily, but may spell bad news if prices are lifted just enough to disincentivize OPEC to take extraordinary measures to ease the glut.
Both WTI and Brent benchmarks were up on Tuesday prior to the API release, despite last week’s bearish news from the IEA that revised downward its forecast for oil demand in 2017 by 50,000 bpd and in 2018 by 190,000 bpd. Oil prices rallied on multiple catalysts—including the arrest of the president of PDVSA’s US-based subsidiary Citgo on corruption charges, and news that bankrupt Venezuela was asking its partners for free oil. Neither catalyst has the power to uphold prices for any length of time.
The WTI benchmark was up 0.96 percent on the day to $56.96 at 4:02pm EST. Brent was trading up 0.61 percent on the day at $62.60.
Gasoline was trading up as well, up 1.46 percent at $1.763.
Distillate inventories saw a decline this week, down 1.67 million barrels.
Inventories at the Cushing, Oklahoma, site decreased as well, by 1.796 million barrels this week.
The U.S. Energy Information Administration report on oil inventories is due to be released on Wednesday at 10:30 a.m. EDT on its normal schedule despite the holiday week.
WTI was trading relatively unchanged moments after the data release at $56.89 at 4:39pm EST, with Brent crude trading at $62.53.
By Julianne Geiger for Oilprice.com