Crude oil prices moved lower today after the Energy Information Administration reported an estimated inventory build of 5.8 million barrels for the week to April 5.
The authority also reported builds in fuel inventories.
This compared with a build of 3.2 million barrels for the previous week, which also saw substantial drawdowns in gasoline and middle distillate inventories.
A day before the EIA report, the American Petroleum Institute estimated a build of over 3 million barrels in crude oil stocks, along with a moderate draw in gasoline and a minor build in middle distillates.
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In gasoline, inventories added 700,000 barrels in the week to April 5, with production averaging 9.4 million barrels daily.
This compared with a draw of 4.3 million barrels for the previous week, when production averaged 10 million barrels daily.
Middle distillate stocks meanwhile rose by 1.7 million barrels in the reporting period, with production averaging 4.6 million bpd. This compared with an inventory draw of 1.3 million barrels for the previous week, when production averaged 4.6 million barrels daily.
Before the EIA report came out oil prices had stabilized following two days of losses amid expectations that Hamas and Israel will finally agree on a ceasefire. The API estimate of an inventory build also helped push prices lower.
However, hopes of a ceasefire in the Middle East are beginning to dampen, which automatically reinforces concern about supply security in case of further escalation. The biggest risk, still, is the potential involvement of Iran, especially after the Israeli strike on the Iranian consulate in Damascus.
Prices remain highly volatile, according to analysts and, as one of them pointed out to Reuters, it would take just one piece of news to restart the rally.
“Anything from a cooler-than-expected US CPI tonight to another Ukrainian drone attack on Russian oil infrastructure to a response from Iran after Israel killed two of its generals in Syria last week is more than capable of re-igniting the uptrend,” Tony Sycamore from IG said.