Oil prices rally on large crude draw

The American Petroleum Institute (API) reported on Tuesday a draw in crude oil inventories of 5.821 million barrels for the week ending January 8.

Analysts had predicted an inventory draw of 2.266 million barrels for the week.

In the previous week, the API reported a draw in oil inventories of 1.663-million barrels, after analysts had predicted a draw of 1.271 million barrels.

Both Brent and WTI were up on Tuesday afternoon before the data release, still buoyed by Saudi Arabia’s generous offer last week to single-handedly—and voluntarily—cut another 1 million barrels per day off its oil production in February and March.

And even though oil prices are now at an 11-month high, coronavirus-inspired lockdowns continue to drag on any hopes of an oil demand rebound, dampening oil price gains.

An hour before Tuesday’s data release, WTI had risen by $0.90 on the day (+1.72%) to $53.14, up more than $3 per barrel on the week. The Brent crude benchmark had risen on the day $0.89 at that time (+1.60%) to $56.55—up almost $3 per barrel on the week.

U.S. oil production held steady at 11.00 million bpd for the fourth week running, according to the latest data provided by the Energy Information Administration. This is still millions of barrels below the 13.1 million bpd high reached in March 2020.

The API reported a build in gasoline inventories of 1.876 million barrels for the week ending January 8—compared to the previous week’s 5.473-million-barrel build. Analysts had expected a 2.695-million barrel build for the week.

Distillate inventories also saw another large increase of 4.433 million barrels for the week, compared to last week’s 7.136-million-barrel increase, while Cushing inventories fell this week by 232,000 barrels.

At 4:34 p.m. EDT, the WTI benchmark was trading at $53.16, while Brent crude was trading at $56.56.