Oil Slips After API Reports Third Successive Gasoline Build

Operating on a one-day delay due to the U.S. holiday, the American Petroleum Institute (API) estimated the inventory build this week for crude oil to be 1.404 million barrels after analysts predicted a draw of 1.367 million barrels.

U.S. crude inventories shed some 74 million barrels since the start of 2021, and about 17 million barrels since the start of 2020. In the week prior, the API reported a draw in crude oil inventories of 1.077 million barrels after analysts had predicted a larger draw of 1.95 million barrels.

Oil prices were trading up on Wednesday in the run-up to the data release after a Houthi attack on the UAE along with the realization that the Omicron variant may not dent oil demand as much as some had previously feared. WTI was trading up 1.99% to $87.13 on the day at 1:00 p.m. EST, and up nearly $8 per barrel on the week.

WTI prices this week rose to levels not seen since October 2014. Brent crude was trading up by 1.43% at $88.76 on the day and up nearly $7 per barrel on the week.

U.S. oil production has been on a slow but steady climb, with the Permian accounting for most of the increase in production. Still, oil production in the United States has yet to rebound to pre-pandemic levels.

For the week ending January 7—the last week for which the Energy Information Administration has provided data; crude oil production in the United States slipped to 11.7 million bpd, with losses of 700,000 bpd since the start of last year.

Last week, the API reported a significant build in gasoline inventories, although the large product build failed to move crude prices to any significant degree. This week, the API reported a build in gasoline inventories for the third week in a row, at 3.463 million barrels for the week ending January 14—on top of the previous week’s 10.86 million-barrel build.

Distillate stocks saw a decrease in inventory of 1.179 million barrels for the week, after last week’s 3.035 million-barrel increase. Cushing saw a 1.496 million-barrel decrease this week.