Crude Inventories Increase By 16.3 Million Barrels

Key Insights

• Analysts expected that crude inventories would grow by 1.15 million barrels, so the EIA data put material pressure on oil markets. 
• Crude inventories have been growing for 8 weeks in a row. 
• Domestic oil production remains unchanged at 12.3 million bpd, and it looks that companies are not ready to raise production at current price levels. 

Crude Inventories Exceed Analyst Estimates

On February 15, EIA reported that crude inventories increased by 16.3 million barrels from the previous week. Analysts expected that crude inventories would grow by just 1.15 million barrels, so the report was a major surprise to the market. At current levels, crude oil inventories are about 8% higher than the five-year average for this time of the year.

Total motor gasoline inventories grew by 2.3 million barrels, while distillate fuel inventories declined by 1.3 million barrels. Interestingly, crude oil imports averaged 6.2 million bpd, declining by 826,000 bpd from the previous week.

Strategic Petroleum Reserve remained unchanged at 371.6 million barrels. It should be noted that U.S. will soon sell 26 million barrels from SPR, so SPR levels will decline to multi-decade lows.

Domestic oil production remained unchanged at 12.3 million bpd. At current price levels, domestic producers are not ready to raise production.

WTI Oil Pulls Back As Traders React To The Surprising Data

WTI oil moved lower after the release of the surprising EIA report. Crude inventories have been growing for 8 weeks in a row, which is bearish for the oil market. The upcoming sale of oil from SPR serves as an additional negative catalyst for oil prices.

Currently, WTI oil is trying to settle below the $78 level, while Brent oil is trading near $84.50. Traders should note that Russia has recently announced that it would reduce production by 500,000 bpd. The impact of this reduction will be felt in March. Meanwhile, Russia’s decision serves as a positive catalyst for oil markets.

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