Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Oil Dips With U.S. Crude Build 9x Above Forecast

CommoditiesMay 01, 2019 02:51PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Barani Krishnan

Investing.com - U.S. crude oil inventories surged nine times more than expected last week, adding a huge increase to a recent streak of builds, as a drop in refining activity, rise in imports and record high domestic production all came together to overwhelm traders.

Crude stockpiles rose by 9.9 million barrels in the week to April 26, versus forecasts for a build of 1.5 million, the U.S. Energy Information Administration said in its regular weekly report.

There were surprises on the gasoline and distillates side of the data as well.

The EIA said gasoline inventories rose by 0.9 million barrels, compared to expectations for a draw of 1 million barrels. Distillate stockpiles dropped by 1.3 million barrels, compared to forecasts for a decline of 193,000 barrels.

U.S. crude production, meanwhile, rose by 100,000 barrels, to a record high of 12.3 million barrels per day.

Unsurprisingly, oil prices fell on the news. But the drop was modest given the sheer size of the crude build, suggesting that traders seemed unsure of where the market was heading near term.

West Texas Intermediate futures, the benchmark for U.S. crude, settled down 31 cents, or 0.5%, at $63.60 per barrel. London Brent futures, the global benchmark for oil, was down 11 cents, or 0.1%, to $72.17 by 2:45 PM ET (18:45 GMT).

Just a week ago, crude prices appeared destined to go only higher with U.S. sanctions on Iranian and Venezuelan oil and unplanned outages in Libya and Angola all coming together to bear maximum upward pressure on a market that rose 32% in the first quarter.

But since this week began, even with fighting breaking out on the streets of Caracas between the forces of Venezuelan President Nicholas Maduro and his challenger Juan Guaido, oil has been unable to rally. In Tuesday's trade, prices rose no more than 0.5% on the day, ending April trade up 6%.

Wednesday's crude build reported by the EIA will likely stop the rally in its tracks for now, traders said.

"It was quite a surprise to have a nine times bigger build in crude than expected, along with a build in gasoline where a draw was expected," said Tariq Zahir, managing member at the oil-focused New York fund Tyche Capital Advisors. "These numbers should continue to put pressure on crude prices in the short term."

John Kilduff, founding partner at New York energy hedge fund Again Capital, agreed.

"The small rise in gasoline inventories was also a bearish factor, as the increase came in the face of continued strong, summer-like demand and a slight decline in refinery utilization rates," Kilduff said.

The EIA said refineries operated at 89.2% of their operable capacity last week, versus last week's 90.1%. Refiners have been cutting back on activity either due to maintenance or reduced profit margins lately in processing crude.

"A drop in refining activity and a rise in imports helped propel crude inventories to another large build," said Matt Smith at New York-based crude cargoes tracker Clipperdata.

"The vast majority of the build was on the US Gulf Coast, with waterborne imports on the rise," said Smith, noting that crude inventories were up nearly 30 million barrels in the last five weeks, with a 500,000-barrel release from the government's Strategic Petroleum Reserve adding to the mix.

Oil Dips With U.S. Crude Build 9x Above Forecast
 

Related Articles

Energy & Precious Metals - Weekly Review and Outlook
Energy & Precious Metals - Weekly Review and Outlook By Investing.com - May 22, 2022 36

By Barani Krishnan Investing.com -- The Federal Reserve is letting the stock market crash in order to bring U.S. inflation under control. If fuel and food prices continue rising,...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (6)
Bade Sahib
Bade Sahib May 02, 2019 2:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Oil the most manipulated commodity
Hank Williams
Hank Williams May 01, 2019 5:41PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
And I guess the twenty million barrels China has of Iranian oil will just evaporate.
Small Trader
Small Trader May 01, 2019 5:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
More like 7X not 9X.
Hank Williams
Hank Williams May 01, 2019 4:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Maybe all of Iranian oil that is already sitting in China will evaporate. Come on WTI $75.
Gold Traderz
Gold Traderz May 01, 2019 3:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sounds more like forecasting issue, these guys are never right
Silverbug 19
Silverbug 19 May 01, 2019 3:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Meaningless compared to rising consumption
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email