Here’s a chart showing the level of US crude oil inventories by days of supply, courtesy of the Commonwealth Bank, comparing where it currently sits compared to the levels of recent years.
After swelling to record highs earlier this year, there’s been a strong draw in US inventories recently, driving them well below the levels seen this time a year ago.
However, after eight weeks of consecutive draws, that trend reversed unexpectedly in early June, sending WTI futures plunging by 5% overnight.
The US Energy Information Administration (EIA) reported that US crude stockpiles rose by 3.3 million barrels last week, surprising traders who had been expecting a further draw of 3.2 million barrels.
The group also reported a lift in gasoline and distillate inventories too, again an outcome that was not expected.
According to Vivek Dhar, mining and energy analyst at the Commonwealth Bank, this saw concerns surrounding oversupply in the US market intensify, leading to the enormous selloff in WTI crude futures.
“Markets were already worried about oversupply concerns after US oil rigs lifted for 20 consecutive weeks, the longest streak in at least 30 years,” he says. “The weekly inventory data exacerbated those market fears.”