Oil drops with US crude increase more than 9 times compared to Investing.com's forecast

By Barani Krishnan

Investing.com – Crude oil inventories in the United States rose nine times more than expected last week, adding a sizable increase to a slew of recent builds, declining refining activity, rising imports and a record domestic production that has all contributed to overwhelm traders.

rose by 9.9 million barrels in the week to April 26, compared to the forecast of 1.5 million barrels, the US Energy Information Administration reported in its weekly report regular.

There were also surprises on the side of the gasoline and distillate data.

The EIA has reported a rise of 0.9 million barrels, compared with the forecast of a draw of one million barrels. 1.3 million barrels, down from 193 000 barrels.

US crude oil production increased by 100,000 barrels to a record 12.3 million barrels per day.

Unsurprisingly, oil prices have fallen on the news. But the decline was modest given the sheer size of gross construction, suggesting that traders seemed unsure of the direction the market would take in the short term.

, the US crude benchmark, was $ 63.60 per barrel, down 31 cents, or 0.5%. , the world benchmark for oil, was down 11 cents, or 0.1%, to 72.17 USD at 14:45 ET (18:45 GMT).

Only a week ago, crude oil prices seemed to be rising only under the impact of US sanctions against Iranian and Venezuelan oil and unforeseen failures in Libya and Angola, which allied themselves to exert pressure. in a market up 32% in the first quarter.

But since the beginning of this week, despite clashes erupting in the streets of Caracas between the forces of Venezuelan President Nicholas Maduro and his rival, Juan Guaido, oil has failed to gather. In Tuesday's trading, prices rose only 0.5% on the day, with trade ending in April rising 6%.

Wednesday's gross construction announced by the EIA will likely stop the rally for now, traders said.

"It was quite surprising to have nine times as much crude oil as expected, as well as zero-draw gasoline," said Tariq Zahir, board member of the New York-based fund. Tyche Capital Advisors. "These numbers should continue to put pressure on crude prices in the near term."

John Kilduff, founding partner of the New York Energy Hedge Fund, Again Capital, agreed.

"The small increase in gasoline inventories was also a bearish factor, this increase being linked to the persistence of strong summer demand and a slight decline in the refinery utilization rate," he said. Kilduff declared.

EIA said refineries operated at 89.2 percent of their operational capacity last week, up from 90.1 percent last week. Refiners have reduced their activity for maintenance reasons or to reduce the profit margins of crude processing.

"A decline in refining activity and increased imports have helped propel crude oil stocks to another major construction," said Matt Smith to the New York-based Clipperdata crude oil cargo tracker.

"The vast majority of construction took place on the US Gulf Coast, with an increase in imports by inland waterway," Smith said, noting that crude inventories were up nearly 30 million barrels at last five weeks, with a release of 500,000 barrels by the government. The strategic oil reserve adds to the mix.