The US is awash with crude oil.
According to data released by the EIA overnight, crude oil inventories rose by a further 7.79 million barrels last week, leaving total inventories at 502.7 million barrels.
The increase, the fourth in a row, more than doubled expectations for an increase of 3.75 million barrels.
As the chart below reveals, supplied by CBA’s mining and energy commodities analyst Vivek Dhar, based on current usage rates, US inventories currently sit at levels not seen for this time of year since 1930, some 86 years ago.
Despite the continued inventory build, along with a surprise increase in US gasoline stores, crude oil futures rocketed higher on Wednesday, bouncing over 8% on the back of US dollar weakness, continued speculation of potential production costs (yet again emanating from Russia) and, in all likelihood, a significant amount of short covering from short-term traders.
Still, given doubts over whether any of those factors will last, or indeed eventuate in the case of production cuts, whether the rebound can last given the US data remains questionable.
In early Asian trade, front-month US WTI futures currently sit up 0.74% at $32.52 a barrel.
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