For the week ended December 16, U.S. crude inventories grew by 2.26 million barrels, according to the U.S. Energy Information Administration. Going into this morning’s report, oil analysts had expected stockpiles to fall by 2.3 million barrels.
That surprise increase in inventories, coming after yesterday’s report from the American Petroleum Institute of a drawdown of 4.1 million barrels for the week, sent West Texas Intermediate for February delivery down 1.5% to $52.49 a barrel. Brent futures fell 1.6% to $54.46 a barrel.
The surprising rise in stockpiles doesn’t so much reverse sentiment looking for a drop in OPEC production and a rise in oil prices in 2017, as it does remind oil traders that going long oil isn’t a trade without risk.
It will take actual evidence that OPEC and non-OPEC producers such as Russia have produced the promised cuts in output that are supposed to go into effect in January to remove doubts in the market about supply.