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Oil prices began to fall in Asia on Wednesday, extending the decline from Tuesday night, when an industry report of a surprise increase in crude inventories in the United States halted the rise in prices. Earlier in the day.
The American Petroleum Institute (API) on Tuesday announced an increase in crude oil inventories of 806,000 barrels for the week ending July 16, bringing the total crude withdrawals in 2021 to a hair’s breadth below 50 million barrels, using data from the API.
However, the API report of an increase in crude inventories contrasts with analysts’ expectations of a 4.333 million barrel inventory draw for the week.
The API also reported an increase in gasoline inventories of 3.307 million barrels for the week ending July 16, compared to the 1.545 million barrels draw of the previous week.
The gain in gasoline inventories is yet another bearish for the oil market, if confirmed by the Energy Information Administration (EIA) weekly inventory report due later Wednesday.
Early Wednesday in Asian trading, WTI crude prices were down 0.45% to $ 66.89 and Brent crude was down 0.49%, barely holding the handle of $ 69 per barrel, at $ 69.05.
But prices started to recover towards the opening.
WTI traded $ 1.74 at 9:53 a.m. EDT, at $ 68.94. Brent crude broke through the $ 70 a barrel mark after climbing $ 1.67, or 2.41%, to land at $ 71.02.
“Crude futures ended Tuesday’s modest rally early Wednesday in Asia after American Petroleum Institute data showed increased US oil inventories for the week ended July 16 , renewing the drop in demand that has engulfed the oil complex since Monday, ”Vanda Insights said in a note early Wednesday.
“Although we saw a rally of relief yesterday after Monday’s sell-off, the market is still trading below US $ 70 / bbl and took slight downward pressure in trading early in the morning today after a bearish and rather surprising API inventory report, ”ING strategists Warren Patterson and Wenyu Yao said Wednesday morning.
The EIA will be the next catalyst for oil prices.
“If EIA figures confirm an increase in inventories later today, it would be the first increase in crude oil inventories since mid-May,” they noted.
By Tsvetana Paraskova for OilUSD
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