Oil Spikes After API Reports Largest Crude Inventory Draw Of The Year

The American Petroleum Institute (API) reported a huge crude oil inventory draw of  10.961 million barrels for the week ending July 18, compared to analyst expectations of a much smaller—but still significant--4.011-million barrel draw.

The inventory draw this week compares to last week’s small draw of 1.401 million barrels, according to the API. A day later, the EIA had estimated an even bigger inventory drawdown of 3.1 million barrels.

After today’s extra-large draw—the largest draw this year--the net build is now just 1.20 million barrels for the 30-week reporting period so far this year, using API data.

Oil prices were trading up on Tuesday with continuing tensions between Iran and most of the Western world over a series of oil tanker attacks and oil tanker seizures in the eve- important Persian Gulf. Even Libya lifting its force majeure on its largest oilfield, Sharara lacked the teeth to push prices down.

The market has grown increasingly tolerant of the tensions in the Middle East, with other metrics having more of an impact on oil prices such production reports out of the shale patch, and force majeures that actually decrease the amount of exportable oil rather than just the threat of decreased oil as is the case with Iran.

At 3:24pm EST, WTI was trading up by $0.57 (+1.01%) at $56.79—a dollar under last week’s price. Brent was trading up $0.56 (+0.89%) at $63.82—also almost a dollar under last week’s level.

Related: Venezuela’s Oil Production Could Soon Fall Below 500,000 Bpd

The API this week reported a 4.436-barrel build in gasoline inventories for week ending July 18. Analysts estimated a draw in gasoline inventories of 730,000 barrels for the week.

Distillate inventories grew by 1.420 million barrels for the week, while inventories at Cushing fell by 448,000 barrels.

US crude oil production as estimated by the Energy Information Administration showed that production for the week ending July 12 slid back this week to 12.0 million bpd, 400,000 bpd off the all-time high hit earlier this year.

The U.S. Energy Information Administration report on crude oil inventories is due to be released at its regularly scheduled time on Wednesday at 10:30a.m. EST.

By 4:36pm EST, WTI was trading at $57.16 while Brent traded at $64.20.

By Julianne Geiger for Oilprice.com

More Top Reads From Oilprice.com:

• Electric Vehicle Sales Are Exploding In Europe
  
• Oil Market Prepares For Super Secret Mexico Hedge
  
• Why Goldman Sachs Thinks Oil Should Be Trading Higher