Energy

Crude Oil Bounces Higher Despite Big Inventory Build

Paul Ausick

Published: January 21, 2016 11:45 am

Last Updated: January 13, 2020 2:46 pm

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Thursday morning, a day later than usual due to the Martin Luther King Jr. holiday observance. U.S. commercial crude inventories increased by 4 million barrels last week, maintaining a total U.S. commercial crude inventory of 486.5 million barrels. The commercial crude inventory remains near levels not seen at this time of year in at least the past 80 years.

Wednesday evening the American Petroleum Institute (API) reported that crude inventories rose by 4.6 million barrels in the week ending January 15. For the same period, analysts had estimated an increase of 2.9 million barrels in crude inventories.

Total gasoline inventories increased by 4.6 million barrels last week, according to the EIA, and have moved well above the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged 8.8 million barrels a day for the past four weeks, down by 2.8% compared with the same period a year ago.

Benchmark West Texas Intermediate (WTI) crude oil traded dropped more than 11% last week and is down another $1.50 a barrel or so since Monday’s high. Many analysts and ratings firms already have lowered their 2016 price targets for a barrel of crude to below $40 a barrel, indicating that there is not much reason to expect an upturn in crude prices. Right now, anything north of $30 probably looks good to U.S. producers.

Before the EIA report, WTI crude for March delivery traded up about 0.2% at around $28.40 a barrel. WTI settled at $28.35 on Wednesday and bounced to around $28.70 shortly after the report’s release. The 52-week range on WTI futures is $27.56 to $65.69.

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