The latest weekly American Petroleum Institute (API) data recorded an inventory draw of 3.8mn barrels. This followed a 2.7mn build the previous week, the first for four weeks, while markets were expecting a build of around 2.4mn barrels in the latest week.
Although the data is volatile and influenced by maintenance schedules, the fourth inventory draw in five weeks will help maintain expectation of firmer demand and underpin crude prices in the near term.
There was a sharp draw in Cushing stocks of 1.96mn barrels, with a significant impact from the outage of a key pipeline into the storage facility.
Gasoline inventories recorded a build of 0.9mn barrels in the week, while there was a second successive sharp decline in distillate of 2.3mn barrels with a net increase in confidence that fuel inventories are coming under control.
There was further choppy price action in crude on Tuesday with fluctuations either side of the U$50.0 p/b level. A slightly softer dollar tone provided support to crude and a small reduction in Saudi Arabian exports and production for August also offered some slight support, although there were still underlying uncertainties surrounding the OPEC agreement.
From levels around $50.35 ahead of the date, WTI moved sharply higher to $50.65 immediately after the data and held a firmer tone around $50.70.
The latest Energy Information Administration (EIA) data will, as usual, be important on Wednesday with high volatility again likely to be a key feature. The production and fuels inventories data will be watched closely, especially as these components have been instrumental in triggering very choppy market reactions over the past few weeks.
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