The latest American Petroleum Institute (API) inventory data for the week ending September 8th recorded a build of 6.18 million barrels after a build of 2.79 million barrels the previous week.
Consensus forecasts were for a build of around 2.5 million barrels for the week, although there was again a high degree of uncertainty surrounding given the continuing impact of hurricane Harvey, especially on refining capacity.
Gasoline was reported as a very substantial draw of 7.90 million barrels after a 2.54 million barrel draw last week while distillate registered a draw of 1.81 million barrels.
Given that refining capacity had been damaged by Harvey, there were expectations of a further significant draw in gasoline inventories for the week.
It will still take some weeks for the full effects of Harvey to work through the system and there will also be an impact from Irma with a dip in demand having an impact on the market.
Cushing registered a build of 1.32 million barrels on the week.
Crude prices were slightly stronger on Tuesday with WTI settling around the $48.25 p/b level. Looking beyond the immediate US outlook, there was some degree of optimism over global oil demand and the potential for an OPEC extension of production cuts for at another 3 months.
From around $49.25 p/b, WTI dipped lower immediately after the release, although prices quickly recovered ground.
Although the headline build was larger than expected, the very sharp decline in gasoline stocks had an important impact in underpinning prices.
Hurricane Harvey will again have an important impact on Wednesday’s EIA inventory release with erratic readings likely for all metrics. There will be expectations of some recovery in production and refinery use after the sharp declines recorded last week.