WTI Crude Oil Slips as API Reports Larger Than Forecast Build in Inventories
WTI crude oil prices are on the decline in early trading on Wednesday, putting a pause in the ongoing bull run, after the API report release in the previous session revealed an unexpectedly large build in crude and distillate inventories across the US. At the time of writing, WTI crude oil is trading at around $82.63 per barrel.
Crude oil lost as much as 1.6% of its value on Tuesday after the API revealed an uptick in crude stocks by 3.6 million barrels over the previous week while distillate stocks increased by 573k barrels. The figure was far higher than economists’ forecast for a build by 1.6 million barrels for crude stocks.
While the inventories’ report exerts downward pressure on oil prices from the demand side, the supply side of the commodity is also feeling some pressure on BP’s latest plans. The leading oil producer has confirmed its interest in driving up investments in onshore US shale oil and gas business from $1 billion this year to $1.5 billion in 2022, in an effort to drive up supply faster and offset the surge in crude oil prices.
Meanwhile, US President Joe Biden has called out OPEC for refusing to ramp up production and driving the steep rise in oil and gas prices affecting leading energy consuming economies. The leading oil producing nations of the world had previously decided to raise oil output gradually and continue to maintain this strategy even as nations worldwide emerge from lockdowns and drive up energy demand at a faster pace.
Looking forward, WTI oil could experience some volatility later in the day when the official government data on US’s crude inventories releases. Even if the EIA does report a larger than forecast build, crude oil prices could experience a temporary dip but remain supported as long as the OPEC decides to stick with its production plans, at least until December when the group could take a different call.
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