The U.S. stockpile of crude oil has increased to its highest level in almost five months, but Thursday's rise in prices was due to traders making up for last week's savage selloff by driving the market higher, albeit mildly in light of the inventory data.
According to the Energy Information Administration's Weekly Petroleum Status Report, demand for gasoline and distillates in the United States increased last week, albeit far less than anticipated.
Oil bulls attempted to identify a cause for Thursday's market recovery following the selloff that occurred from Tuesday through Wednesday and caused crude prices to close the previous session at their lowest level in seven months.
Others cited the United States. The stockpile in the Strategic Petroleum Reserve dropped to 442.5 million barrels last week, its lowest level since November 1984, after a significant outflow of 7.5 million barrels occurred once more last week. Since November of last year, the Biden administration has begun reducing the SPR to make up for the lack of crude supplies on the domestic gasoline market.
Sunil Kumar Dixit, chief technical strategist at SKCharting.com, remarked that "oversold is a good justification and a valid here." But WTI's potential upside seems constrained around $86 and less likely to reach $90. On the other hand, a rejection at $90 might allow for a downside of $77 once more.
After a 5.7% decline on Wednesday, WTI, or West Texas Intermediate, ended the day up $1.60, or 2%, at $83.54 per barrel.
Even after the recovery, WTI was still 36% below the 14-year high of $130.50 it reached on March 7 in the wake of the West's initial sanctions on Russian energy exports in response to Putin's invasion of Ukraine.
Last week saw an increase in crude oil stockpiles of 8.844 million, the largest weekly increase since the week ending April 8 when there was a build of 9.382 million. Investing.com's industry analysts had predicted a crude drop of 250,000 barrels last week instead.
In contrast to projections for a drop of 1.667 million barrels, gasoline inventories, the main automotive fuel in America, increased by a tiny 333,000 barrels.
Stocks of distillates, the type of oil used to produce diesel for cars, buses, trains, and aeroplanes, increased by 95,000 barrels, less than the 530,000 barrels that had been anticipated