The latest weekly American Petroleum Institute (API) inventory data recorded a draw of 0.72mn barrels following a draw of 1.28mn the previous week. Markets were expecting an increase in inventories of around 0.6mn barrels for the week.
Gasoline inventories recorded another sizeable build of 3.4mn barrels in the week while there was a build of 2.2mn barrels for distillate and this was the largest build for over two months.
Cushing recorded a sizeable build of 2.4mn barrels after being little changed the previous week.
There will be considerable disappointment over the fuel data with the substantial build on the week for both gasoline and distillate, which will increase overall market concerns surrounding high stocks and offset any potential benefit from the headline draw.
Crude prices were again subjected to very choppy trading conditions on Tuesday with further sharp losses on the day of over 3.50%. Sentiment surrounding OPEC and the prospects for a production deal at Wednesday’s Ministerial meeting in Vienna continued to dominate the market.
Amid the flood of rhetoric, Iran and Iraq are still opposed to any cut in their production while Saudi Arabia has continued to insist that both countries make some contribution. Wednesday’s focus will, therefore, be whether this divide can be breached.
There was a generally pessimistic tone and WTI declined to lows below $45.20 p/b during the New York session.
There was only a very muted initial response to the data on release with WTI unchanged around $45.30 with a very slight tick lower in prices quickly reversed.
The Energy Information Administration (EIA) data release on Wednesday is liable to trigger further choppy trading, although the event will inevitably be overshadowed by the OPEC meeting, which is liable to still be in session when the EIA data is released.