Crude Oil Prices Continue Lower After Huge EIA Inventory Increase

Oil prices made a massive bearish reversal yesterday and today the selling pressure continues, with WTI crude falling below $72 a while ago. Crude Oil inventories showed a massive buildup as well, with the API private inventories yesterday coming above 10 million barrels, while the EIA inventories showed a buildup of more than 5 million barrels.

EIA crude Oil inventories showed a considerable buildup

Oil prices have surged this month due to the potential for a broader Middle Eastern conflict, with U.S. WTI crude surpassing $78 by Monday morning, reflecting an increase of more than $10 overall. This upward momentum, however, paused as uncertainty grew regarding Israel’s potential response to Iran. Today, crude oil futures fell by nearly $3, with WTI dropping below $72 after a more than $4 decline the previous day.

Additionally, energy prices faced downward pressure as Chinese officials failed to meet expectations at a recent press briefing by not announcing any new economic stimulus initiatives. Looking ahead, developments in the Middle East will likely be the key drivers of short-term oil price movements.

US WTI Chart Daily – The Reversal Has Been Brutal Too

Today’s EIA figures indicate substantial variances in crude and refined product inventories, with crude oil stockpiles building significantly while refined products, particularly gasoline and distillates, see substantial draws. However the impact in Oil prices has been minimal. The divergence may affect crude oil prices and signal shifts in market dynamics, as increased crude stockpiles can signal oversupply, while lower gasoline and distillate levels may suggest stronger end-user demand.

EIA Weekly U.S. Oil Inventory Data:

  • Crude Oil Inventories: Increased by +5.81 million barrels, significantly above the expected rise of 2.048 million barrels. This larger-than-anticipated build suggests a higher supply level.
  • Gasoline Inventories: Decreased by -6.304 million barrels, sharply contrasting with the expected decline of 1.123 million barrels. This larger drawdown reflects robust gasoline demand or reduced gasoline production.
  • Distillate Inventories: Fell by -3.124 million barrels, surpassing the anticipated draw of 1.865 million barrels, indicating strong usage or constrained production in distillates such as diesel and heating oil.
  • Refinery Utilization: Declined by -0.9%, more than the forecasted 0.1% reduction. Lower refinery utilization can point to reduced refining activity, which may impact fuel production rates.

Private Oil Inventory Data (from the API):

  • Crude Oil: Notably large build of +10.9 million barrels, underscoring an excess in crude supply that may affect market prices.
  • Gasoline: Moderate drawdown of -557,000 barrels, suggesting steady demand but a less drastic reduction compared to EIA data.
  • Distillates: Decline of -2.59 million barrels, highlighting continued demand and tighter supply conditions.

US WTI Crude Oil Live Chart

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Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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