Oil Slides After Reports of Large U.S. Crude Inventories Build

Oil prices tumbled on Wednesday, February 12, following reports of a significant increase in U.S. crude oil inventories. The American Petroleum Institute (API) estimated that crude oil inventories in the United States rose by a massive 9.043 million barrels for the week ending January 31. Analysts had expected a much smaller 2.8-million-barrel build, indicating a surprise increase in inventories.



The API's inventory report also showed a 2.507 million barrel decrease in gasoline inventories, which was at least partially offset by the crude oil inventory build. The U.S. Energy Information Administration (EIA) will release its official inventory report later in the day, which could provide further insights into the market dynamics.



The unexpected inventory build, combined with other bearish factors such as a strong U.S. dollar and concerns about global economic growth, contributed to the recent price slide in crude oil. At 4:09 pm ET, Brent crude was trading up $1.05 (+1.38%) on the day at $76.92, a $0.92 per barrel rise from this time last week. The U.S. benchmark WTI was trading up on the day by $0.91 (+1.26%) at $73.23, a roughly $0.60 increase per barrel over last week’s level.

The high inventory levels and recent inventory builds suggest that the U.S. oil market is well-supplied, which could put downward pressure on crude oil prices. However, it is essential to consider other factors, such as geopolitical risks and global demand trends, which can also influence crude oil prices.

In conclusion, the recent inventory build in U.S. crude oil, as reported by the API, contributed to the downward pressure on crude oil prices. Market expectations for inventory changes significantly influence crude oil prices, and the unexpected inventory build sent a bearish signal to the market. However, other factors, such as geopolitical risks and global demand trends, should also be considered when analyzing the impact of inventory data on crude oil prices.