Brent Oil and WTi crude oil traded lower on Wednesday in reaction to industry data that showed a huge build in U.S. crude stockpiles that started the day at a record high.Brent Crude was down 12 cents at $36.69 a barrel. On Tuesday, the market settle up 24 cents after touching $37.25, the highest level since January 5. WTI Crude was down 40 cents at $34 a barrel. U.S. crude hit a one-month high on Tuesday.According to the American Petroleum Institute, U.S. crude inventories rose by 9.9 million barrels last week. The figure was well above the 3.6 million barrel increase expected by analysts. The news drove the market lower on worries that the official data from the U.S. Energy Information Administration due later today would show a large build similar to the API numbers.
Recent price action suggests that crude oil may have bottomed and could continue to build this year if U.S. shale firms continue to cut investments. This, combined with a possible production freeze by OPEC and Non-OPEC producers could eventually lead to a reduction in supply.
Crude oil prices were also supported by comments from Russian Energy Minister Alexander Novak who said that oil firms in the country support a pledge to average production this year at January levels.
Russian President Vladimir Putin spoke of “more radical” measures to balance the global oil market, on top of a production freeze plan jointly pursued by Moscow with Saudi Arabia, Qatar and Venezuela. Later today, the EIA will release its inventory figures. Traders are looking for an increase of about 2.6 million barrels for the week-ending February 26.
Gasoline stockpiles are expected to fall by 1.5 million barrels, according to analysts surveyed. Estimates range from a rise of 1.5 million barrels to a drop of 2.7 million barrels. Ten analysts surveyed expect a drop, with one expecting a gain.
Stocks of distillates, which include heating oil and diesel, are expected to fall by 1.3 million barrels. Forecasts range from a rise of 300,000 barrels to a drop of 3 million barrels.
Refinery use is seen falling 0.3 percentage points to 87% capacity, based on EIA data. Forecasts range from an increase of 0.5 points to a fall of 1.0 points.
Today’s EIA inventory report is due out at 10:30 am. ET.