Oil price rally on hold after API reports rising crude inventories

The American Petroleum Institute (API) estimated on Tuesday a build in crude oil inventories of 2.048 million barrels for the week ending July 3.

Analysts had predicted an inventory draw of 3.114 million barrels.

In the previous week, the API reported a major decrease in crude oil inventories of 8.156 million barrels, after analysts had predicted a much smaller build. It was the largest crude draw this year.

WTI was trading slightly down on Tuesday afternoon prior to the API’s data release with prices feeling minor pressure from an increase in the number of new coronavirus cases in the United States.

Oil production in the United States has now fallen from 13.1 million bpd on March 13 to 11 million bpd for June 26, according to the Energy Information Administration, for the second week in a row. Production has rebounded somewhat from week ending June 12, which saw an average of 10.5 million bpd produced.

At 3:23 pm EDT on Tuesday the WTI benchmark was trading down on the day by $0.20 (-0.49%) at $40.43. The price of a Brent barrel was trading down on Tuesday as well, by $0.20 (-0.46%), at $4290—both benchmarks are trading up on the week.

The API reported a draw of 1.825 million barrels of gasoline for week ending July 3—compared to last week’s 2.459-barrel draw. This week’s draw compares to analyst expectations for a smaller 2,000-barrel draw for the week.

Distillate inventories were down by 847,000 barrels for the week, compared to last week’s 2.638-million-barrel build, while Cushing inventories saw a build of 2.219 million barrels.

At 4:42 pm EDT, WTI was trading at $40.33 while Brent was trading at $42.78.