Investing.com - U.S. crude oil inventories rose unexpectedly last week, giving traders a reason to take a break in the 2019 rally.
The Energy Information Administration said in its regular weekly report that crude oil inventories grew by 7.24 million barrels in the week to March 29.
That was compared to forecasts for a stockpile draw of 0.43 million barrels, after a gain of 2.80 million barrels in the previous week.
The EIA report also showed that gasoline inventories fell by 1.78 million barrels, compared to expectations for a draw of 1.54 million barrels, while distillate stockpiles dropped by 2.0 million barrels, compared to forecasts for a decline of 0.51 million.
Oil prices turned lower in a kneejerk reaction to the data but had since continued to waver between positive and negative territory. Both U.S. crude prices and London-traded Brent crude futures were last trading slightly higher, close to the unchanged mark. and were off about 40 cents from intraday highs.
“This is a huge crude build contrary to expectations, and though much of it may be due to the shakeup we’re still having over Houston shipping channel closure, it nevertheless gives pause to the near unstoppable rally we’ve had over the past week ,” Investing.com senior commodity analyst Barani Krishnan said after the release.
Oil had moved consecutively higher in April, touching fresh 2019 highs, in a continuation of the first-quarter rally that saw West Texas Intermediate oil soar more than 30%.
Positive signs in economic data on business activity in both China and the U.S. this week had eased concerns over the potential negative impact on oil demand from a slowing global economy.
Aggressive production cuts from OPEC and Russian-led allies have convinced traders that the global supply glut was on track to rebalance this year, while U.S. sanctions against Iran and Venezuela, along with power outages, contributed to the reduction in supply.
While Krishnan suggested that another couple of weeks of these type of builds would surely force bulls to lose their momentum, he said that, “for now, $70 Brent is virtually in the bag while WTI is still trying hard to crack $63 next.”