Oil Prices Rebound On Larger Than Expected Crude Draw

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

Analysts had predicted an inventory smaller draw of 430,000 barrels for the week.

In the previous week, the API reported a build in oil inventories of 2.562-million barrels, after analysts had predicted a draw of 1.167 million barrels.

Oil prices were trading down on Tuesday ahead of the data release. China lockdowns, the IEA’s grim outlook on oil demand, a slow global rollout of the coronavirus vaccine, and a potential delay or hiccup in the next round of stimulus payments that the new administration said would be pushed through right away is dragging on prices.

A half-hour before Tuesday’s data release, WTI had fallen by $0.27 on the day (-0.51%) to $52.50, down $0.80 since last Wednesday.

The Brent crude benchmark had fallen on the day $0.06 at that time (-0.11%) to $55.82—down $0.70 on the week.

U.S. oil production has remained steady at 11.0 million bpd for six weeks in a row, according to the latest data provided by the Energy Information Administration, with limited expectations of any rapid production increases as oil companies tread carefully.

The API reported a build in gasoline inventories of 3.058 million barrels for the week ending January 22—compared to the previous week’s 1.129-million-barrel build. Analysts had expected a 1.764-million-barrel build for the week.

Distillate stocks saw an increase of 1.398 million barrels for the week, adding onto last week’s 816,000-barrel increase, while Cushing inventories fell by 3.475 million barrels.

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