Today’s weekly inventory report from the DoE showed an unexpected and large build in crude oil stockpiles. While traders were expecting stockpiles to decline by 1.5 million barrels, there was actually a build in inventories of 4.801 million barrels. As one might expect given the large build of stockpiles, crude oil prices reacted negatively to the news and finished the day down by more than 3%. The chart to the right shows the intraday price of WTI crude oil today, and what looks so strange about the chart is that the collapse in prices came before the bearish inventory report was released. Makes one wonder whether some traders had an early look at the report.
Getting back to the actual report, today’s increase in stockpiles comes at a time of year when normally see declines. As a result, inventories are now 161 million barrels (+47.3%) above their historical average for this time of year and just 255K below their all-time high set earlier this year. These levels of inventory are simply unprecedented.