Stockpiles of U.S. crude oil rose 1.2 million barrels, the Energy Information Administration said Wednesday, confounding expectations. Analysts tracked by Investing.com had forecast a draw of 152,000 barrels compared to a build of 5.7 million barrels the previous week.
U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, are now at a record high of 539.3 million barrels. That is about 15% above the five year average for this time of year.
Oil prices have been under pressure because of mounting evidence that it will take longer to bring down mounting stockpiles of crude as businesses struggle to come back after Covid-19 lockdowns. Crude Oil WTI Futures recently traded down 0.17%, at $38.21 a barrel, edging higher after Wednesday’s data was reported.
Late Tuesday, the American Petroleum Institute said U.S. crude stocks rose 3.3 million barrels, the third increase in four weeks.
The EIA said distillate stock fell 1.35 million barrels, while gasoline stores fell 1.67 million barrels.
“This is a very interesting data set that kind of offsets one bullish impact against a bearish one,” said Investing.com analyst Barani Krishnan. “Firstly, you have an unexpected build in crude that is offset by the bigger than expected drop in gasoline and surprise draw in distillates.
The distillates number is a very important marker as it marks the first such draw in over two months. But distillates production actually fell last week, so it may explain the draw.”
Krishnan added that crude imports fell 222,000 barrels per day last week, “so it’s kind of surprising that you actually had a build in crude inventories. And Cushing inventories fell by 2.6 million barrels. To make it all more confusing, you have another 1.7 million barrels that went into the Strategic Petroleum Reserve.” Crude production of 10.5 million barrels per day is down 2.6 million bpd from the mid-March record high of 13.1 million bpd, he noted.
Demand for crude collapsed earlier this year because of Covid-19 work shutdowns. OECD stockpiles, traditionally the key indicator for the Organization of Petroleum Exporting Countries, are some 141 million barrels above their five-year average, implying a significant supply overhang even if the OPEC+ producers extend their agreement to cut production 9.7 million barrels a day beyond the end of July.
Earlier Wednesday, OPEC’s latest monthly report indicated that there will be room for its members to ease their production constraints later in the year. It estimated global demand for its crude rising to 27.8 million barrels a day in the third quarter and to 31.2 million bpd by the final quarter of 2020.
OPEC members produced 24.20 mil bpd in May.