Large Crude Inventory Build Erases Tuesday’s Price Gains

The American Petroleum Institute (API) estimated on Tuesday a larger than anticipated crude oil inventory build of 6-million barrels for the week ending February 7, compared to analyst expectations of a 2.987-million-barrel build in inventory.

Last week saw a larger than expected build in crude oil inventories of 4.18-million barrels, according to API data. The EIA’s estimates were for a slightly smaller build of 3.4-million barrels for that week.

Oil prices were trading slightly up in the afternoon hours, but hardly much of a recovery given the brutal price slide that the oil markets have experienced over the last month as the coronavirus continues to stifle economic activity and threaten oil.

At 3:34 pm EST on Tuesday the WTI benchmark was trading up on the day by $0.16 (+0.32%) at $49.73—but still down slightly week on week. The price of a Brent barrel was also trading up on Tuesday, by $0.64 (+1.20%), at $53.91—but still off around $0.40 from last week.

Overall, the benchmarks have slid more than $14 per barrel since the first week of the year.

The API this week also reported a build of 1.1 million barrels of gasoline for week ending February 7, after last week’s 1.96-million-barrel build. This week’s large gasoline build compares to analyst expectations of a 546,000-barrel-build for the week.

Distillate inventories were down by 2.3 million barrels for the week, compared to last week’s 1.78-million-barrel draw, while Cushing inventories rose by 1.3 million barrels.

US crude oil production as estimated by the Energy Information Administration showed that production for the week ending January 31 slipped slightly to 12.9 million bpd off just 100,000 bpd from an all-time high.

At 4:42 pm EDT, WTI was trading at $50.02, while Brent was trading at $54.25.

By Julianne Geiger for Oilprice.com