EIA, API Inventories Reports Confuse Crude Oil Traders

U.S. crude oil futures rose on Wednesday, but retreated from its highs after the U.S. Energy Information Administration (EIA) reported a surprise increase in the country’s crude stockpiles as refinery activity fell. According to the EIA, U.S. commercial crude inventories rose by 2.3 million barrels in the week through January 13 to 485.5 million barrels. Investors were looking for an increase of 100,000 barrels.

Additionally, gasoline stocks increased by 6 million barrels, but distillate inventories were down by 1 million barrels, according to the EIA report.

The EIA report contradicted the report from the American Petroleum Institute (API), which came out late Tuesday afternoon. This report showed U.S. crude stocks fell 5.04 million barrels in the week-ended January 13. This was well above the 342,000-barrel decline forecast. The API data also showed much larger-than-expected increases in gasoline and distillate stocks.

The EIA also disclosed that U.S. oil production was flat during the most recent week. This came as a surprise because data earlier in the week suggested U.S. output was on the rise.

Crude oil found support early in the session after the International Energy Agency (IEA) said oil markets were tightening even before cuts agreed by OPEC and other producers took effect.

The IEA report also said it was “far too soon” to gauge OPEC members’ levels of compliance with its program to cut output. It also said commercial oil inventories in the developed world fell for a fourth consecutive month in November, with another decline projected for December.

Also on Thursday, the head of the EIA said that he expected U.S. shale oil output to rebound by as much as 500,000 barrels per day over the course of 2017, which would be a new record.

Finally, it raised its 2016 demand growth estimate, and suggested that the data indicated that rising demand was slowly tightening global oil markets.

U.S. Economic Reports

In economic news, U.S. Building Permits came in at 1.21 million, in line with expectations and matching the previous report. Housing Starts were up 1.25 million units, better than the 1.19 million unit forecast and the 1.10 million units from the previous month. This was an 11.3 percent jump.

Weekly Jobless Claims declined 15,000 to 234,000, close to their lowest levels in 40 years. The Philly Fed Manufacturing Index rose 23.6, above a consensus estimate of 16.3.