Oil plunges after API reports unexpected large crude build-up

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The American Petroleum Institute (API) on Tuesday estimated a large accumulation of crude oil stocks of 8.731 million barrels for the week ending May 22.

Analysts had expected a draw of 2.50 million barrels.

In the past week, the API estimated a drawdown of 4.8 million barrels from crude oil inventories. Meanwhile, estimates from the EIA were very different, with the industry agency reporting last week that stocks were down 5 million barrels.

WTI was down Wednesday afternoon before API data was released, although the outlook for a rebalanced oil market is more positive than it was just two weeks ago, with many US states relaxing lock restrictions and the world’s largest oil producers, including Saudi Arabia. Arabia, Russia and the United States, a production cut more than many market analysts had expected would be the case.

Oil production in the U.S. fell from 13.1 million bpd on March 13 to 11.5 million bpd on May 15, according to the Energy Information Administration – a drop of 1.6 million b / d – more than last year’s OPEC production reduction agreement.

At 2:19 p.m. EDT Tuesday, the WTI benchmark was trading at $ 1.35 (-3.93%). Brent crude oil also traded on Wednesday, $ 1.29- (3.57%) to $ 34.88.

The API reported construction of 1,120 million barrels of gasoline for the week ending May 22 – compared to last week’s 651,000 barrel draw. This week’s draw compares to analysts’ expectations for a draw of 33,000 barrels for the week.

Distillate inventories increased 6.907 million barrels for the week, compared to the construction of 5.1 million barrels last week, while Cushing inventories registered a circulation of 3,370 million barrels.

At 4:39 p.m. EDT, WTI was trading at $ 32.7 while Brent was trading at $ 34.68.

By Julianne Geiger for Oilprice.com

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