Oil prices sink on larger than expected crude build

The American Petroleum Institute (API) reported on Tuesday a build in crude oil inventories of 951,000 barrels for the week ending October 2.

Analysts had predicted an inventory build of 400,000 barrels.

In the previous week, the API reported a draw in crude oil inventories of 831,000 barrels, after analysts had predicted a draw of 2.325-million barrels.

Oil prices were trading up on Tuesday morning before the API’s data release as the turbulent market was assuaged by President Donald Trump’s release from Walter Reed Medical Center, where he was being treated for the coronavirus.

In the hours leading up to Tuesday’s data release, at 10:48 am EDT, WTI had risen by $1.45 (+3.70%) to $40.67, up $2 per barrel on the week. The Brent crude benchmark had risen by $1.40 at that time (+3.99%) to $42.69.

Oil production in the United States remained unchanged in the last week, still down from a high of 13.1 million bpd on March 13. U.S. oil production currently sits at 10.7 million bpd, according to the Energy Information Administration—2.4 million bpd under those March highs.

The API reported a draw in gasoline inventories of 867,000 barrels of gasoline for the week ending October 2—compared to the previous week’s 1.623-million-barrel build. Analysts had expected a 900,000-barrel draw for the week.

Distillate inventories were down by 1.033 million barrels for the week, compared to last week’s 3.424-million-barrel draw, while Cushing inventories rose by 749,000 barrels.

At 4:33 pm EDT, the WTI benchmark was trading at $40.16 while Brent crude was trading at $42.18.