Oil prices rebound on larger-than-expected crude draw

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The American Petroleum Institute (API) on Tuesday reported a drop in crude oil inventories of 5.272 million barrels for the week ending Jan. 22.

Analysts had predicted a smaller inventory drawdown of 430,000 barrels for the week.

In the previous week, API reported an increase in oil inventories of 2.562 million barrels, after analysts predicted a drawdown of 1.167 million barrels.

Oil prices traded lower on Tuesday ahead of the data release. Lockdowns in China, the IEA’s grim outlook on oil demand, the slow global rollout of the coronavirus vaccine, and a delay or potential hiccup in the next round of stimulus payments which the new administration says would be applied immediately, weigh on prices.

Half an hour before Tuesday’s data release, WTI had fallen on-day $ 0.27 (-0.51%) to $ 52.50, down $ 0.80 from last Wednesday.

The benchmark Brent index had fallen on the day from $ 0.06 at the time (-0.11%) to $ 55.82, down $ 0.70 on the week.

U.S. oil production has held steady at 11.0 million bpd for six straight weeks, according to the latest data provided by the Energy Information Administration, with limited expectations of any rapid increases in production as oil companies demonstrate caution.

API reported an increase in gasoline inventories of 3.058 million barrels for the week ending Jan. 22, compared to the construction of 1.129 million barrels the week before. Analysts were expecting a build of 1.764 million barrels for the week.

Distillate inventories rose 1.398 million barrels for the week, on top of the 816,000 barrel increase last week, while Cushing inventories fell 3.475 million barrels.

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At 4:36 p.m. EDT, the benchmark WTI was trading at $ 52.55, while Brent crude was trading at $ 55.87.

By Julianne Geiger for OilUSD

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