Large And Unexpected Crude Build Halts Oil Rally

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Wednesday, July 22, 2020 / 04:42 PM / by Julianne Geiger of Oilprice.com / Header Image Credit: Oilprice

 

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The American Petroleum Institute (API) estimated on Tuesday a build in crude oil inventories of 7.544 million barrels for the week ending July 17.

 

Bulls were disappointed with the news, as analysts had predicted an inventory draw of 1.950 million barrels.

 

In the previous week, the API reported a major decrease in crude oil inventories of 8.322 million barrels, after analysts had predicted a much smaller draw.

 

WTI was trading up on Tuesday afternoon prior to the API's data release, with markets ignoring the uptick in the number of new coronavirus cases in the United States, instead focusing on the vaccine prospects and a successful European stimulus package that was passed. Prices had reached levels not seen since March, prior to the oil price war that Russia and Saudi Arabia waged on the world, and prior to the settling in of the pandemic in the world's second-largest oil consumer-the United States.

 

Oil production in the United States has now fallen from 13.1 million bpd on March 13 to 11 million bpd for July 10, according to the Energy Information Administration, for the fourth week in a row.  Production has rebounded somewhat from week ending June 12, which saw an average of just 10.5 million bpd produced.

 

At 1:13 pm EDT on Tuesday the WTI benchmark was trading up on the day by $0.93 (+2.28%) at $41.74-about $2 above last week's levels. The price of a Brent barrel was trading up as well, by $0.99 (+2.29%), at $44.27-also $2 per barrel higher than this time last week.

 

The API reported a draw of 2.019 million barrels of gasoline for week ending July 10-compared to last week's 3.611-barrel draw. This week's draw compares to analyst expectations for a 1.175-million-barrel draw for the week.

 

Distillate inventories were down by 1.357 million barrels for the week, compared to last week's 3.03-million-barrel build, while Cushing inventories saw an increase of 716,000 barrels.

 

At 4:48 pm EDT, WTI was trading at $41.76 while Brent was trading at $44.31.

 

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