Oil Inventories Build For 7th Straight Week

Real-time Monetary Inflation (last 12 months): 2.4%

This morning, the U.S. Energy Department reported domestic oil inventories rose for the seventh consecutive week. Playing catch-up with the government's figures, the industry-supported American Petroleum Institute had called for a 6.5-million-barrel jump, while sell-side analysts forecast a 1.6-million- to 2.0-million-barrel build. Actual crude oil inventories were reported to have risen by 1.4 million barrels.

The API's estimate of a 3.2-million-barrel decline in gasoline stocks was fairly close to the Energy Department's 2.9-million-barrel drawdown. Analysts had predicted stores to stay flat or maybe rise as much as 200,000 barrels over the previous week's level.

Industry figures were also better predictors of distillate fuel inventories. API guesstimated a 2.8-million-barrel decline in supplies, versus an actual decrease of 2.2 million. The Street was eyeing a decline between 900,000 and 1 million barrels.

Oil Patch watchers were also looking for refinery usage to fall to 81.8 percent of operable capacity from last week's 81.9 utilization rate. Refinery slowdowns—to 80.8 of capacity—were actually more dramatic.

NYMEX crude oil traded higher in overnight trading following a 0.5 percent dip in Tuesday's session. April's upward drift to the $81.80-$81.90 level in electronic trading faded as Wednesday's opening bell rang.

For the week, crude prices rose 3.3 percent, while gasoline jumped 4 percent. Heating oil gained 2.4 percent. The uptick in gasoline prices improved 3-2-1 springtime refinery runs. Gross margins increased 14 basis points (0.14 percent), increasing the premium enjoyed by the gasoline-rich mix to 137 points over distillate heavy 2-1-1 runs.

This week, average daily NYMEX crude volume rose 9.2 percent to a 556,200 contract. Open interest rose 3.2 percent to a daily average of 1.322 million contracts.

Contango shrunk this week as the NYMEX three-month roll came in 16 cents a barrel to an average $1.12. Annualized carry costs now average 5.5 percent.

 

Nearby NYMEX Crude Oil

 

NYMEX crude oil's technical picture remains muddled. MACD has leveled off, while stochastics and the RSI indicator are overbought. There's a bid under $81.75, buoying the spot contract, which has additional support at its 10-day moving average of $80. 34. Closes above the $82 level are needed to indicate that a short-term low's been posted.