The latest weekly American Petroleum Institute (API) inventory data for the week ending March 17th reported a build of 4.53 million barrels. This followed the relatively small draw of 0.53 million barrels last week and was above consensus forecasts for a build of around 2.5 million barrels on the week. This was also the ninth API build in the last eleven weeks.
Gasoline inventories recorded a draw of 4.93 million barrels after a draw of 3.88 million barrels last week while distillate registered a draw of 0.88 million barrels after a decline of 4.07 million barrels previously. The fuel data was again a significantly positive aspect of the report with consistent drawdowns in inventories over the past few weeks, although this may raise demand questions.
Cushing recorded another substantial build of 1.97 million barrels for the week from 2.06 million previously.
After making headway early in European trading, crude oil prices came under renewed selling pressure in US trading. From a peak around $48.70 p/b May WTI futures declined to trade just below $48.00 late in the US session before a tentative rally.
A slide in equity markets undermined risk appetite, which tended to undermine crude prices and oil was unable to derive any benefit from a weaker US currency even though the dollar’s trade-weighted index declined to 7-week lows.
There were further underlying concerns surrounding excess US inventories and major doubts whether OPEC would be able to persuade non-OPEC countries to extend production curbs.
Oil prices initially ticked higher following the release with May WTI futures moving to $48.45 p/b from $48.30, but there was further selling interest on rallies with prices then quickly moving to below pre-release levels.
Wednesday’s Energy Information Administration (EIA) release will again be an important focus as a significant build on the week would push crude stocks to record highs. The latest production data will also be important given expectations that shale output will rise steadily in the short term.