A four-week long streak of US crude oil inventory drawdowns was broken when official data from the American Petroleum Institute (API) showed an unexpected build of 7.819 million barrels, compared to an anticipated drawdown of 3.913 million barrels.
US oil inventories reflect the amount of crude oil held by US firms, and they indicate the strength of demand in the US, which in turn can influence prices for the rest of world. An unexpected increase in inventories reflects weaker than expected demand, which generally puts downward pressure on crude oil prices and derived products, such as fuel and lubricants like Mobil DTE hydraulic oil.
The news helped offset market reactions to OPEC’s latest Monthly Oil Market Report, which revealed that crude oil production had declined among its members. WTI Crude traded around the $75 mark following the release of data from the API.
The API also reported increases in other oil-related inventories. Gasoline inventories increased by a further 877,000 barrels, despite them already increasing by 5.93 million barrels in the previous week. Cushing inventories and distillate stocks also saw increases of 640,000 barrels and 3.9 million barrels, respectively. Overall, US crude oil production also increased to 12.2 million barrels per day, the first rise in four weeks.
The US inventories are, of course, separate from the Strategic Petroleum Reserve (SPR), which is run by the US Department of Energy. The same week saw a release of 4.7 million barrels from the SPR, leaving it at its lowest level since 1984 at 382 million barrels.