Oil Prices Jump On Surprise Crude Draw

The American Petroleum Institute (API) estimated on Tuesday a crude oil inventory draw of 1.247 million barrels for the week ending March 21, capturing the period before over half of all Americans went into lockdown mode this week—a development that will surely curb the appetite for oil.

Today’s inventory move was expected to be for a build of 2.774-million-barrels.

In the previous week, the API estimated a surprise draw in crude oil inventories of 421,000 barrels, while the EIA’s estimates were more bearish, reporting a build of 2.0 million barrels for the week.

Oil prices were trading up on Tuesday afternoon prior to the API’s data release on new hopes that a stimulus package would be passed and that the oil price war will come to an end with the US intervening.  

At 4:29 pm EDT on Tuesday the WTI benchmark was trading up on the day by $0.75 (+3.21%) at $24.11—down nearly $4 week on week. The price of a Brent barrel was also trading up on Tuesday, by $0.57 (+1.95%), at $29.86—down by roughly $2 week on week.

The API reported a large draw of 2.622 million barrels of gasoline for week ending March 20, after last week’s 7.834-million-barrel draw. This week’s draw compares to analyst expectations for a 657,000-barrel draw for the week.

Distillate inventories were also down, by 1.90 million barrels for the week, compared to last week’s 3.625-million-barrel draw, while Cushing inventories rose by 1.066 million barrels.

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US crude oil production as estimated by the Energy Information Administration showed that production for the week ending March 13 resumed its all-time high of 13.1 million bpd.

At 4:39 pm EDT, WTI was trading at $24.09 while Brent was trading at $29.90.

By Julianne Geiger for Oilprice.com

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