3.1 MMBBL draw was expected, but a 3.3 MMBBL build happened
An unexpected crude oil inventory build sent crude prices reeling today, after several weeks of inventory draws seemed to signal the long-awaited market rebalancing.
The EIA today reported a build in commercial crude oil inventories last week of just under 3.3 million barrels. This came as a surprise to traders, as according to Bloomberg analysts predicted a draw of about 3.1 million barrels.
Stocks of refined products also grew, with gasoline, fuel oil and other oils each showing inventory builds. The Strategic Petroleum Reserve did report a draw in inventories, however. This is the result of the scheduled sales in place, as several acts of congress have called for sales from the SPR to fund various programs.
Decreased demand from refineries likely contributed to the build, as U.S. refinery utilization dropped by about 0.9% to 94.1%. Crude refinery runs decreased approximately 2% to 17.2 MMBOPD.
Prices dropped sharply on the news, with both WTI and Brent showing immediate decreases. WTI finished the day down $2.40, or 4.98%, closing at $45.79/bbl. This is the lowest closing price WTI has seen since May 4th, when markets dropped to $45.52/bbl.
Brent dropped nearly as sharply, losing $1.93 or 3.85% to close at $48.19/bbl. According to Bloomberg, Brent prices have not been this low since November.
