A private survey by the American Petroleum Institute (API) reported a substantial decline in crude oil inventory, ahead of the official data release by the US government. Expectations had been for a modest decrease in crude oil by 0.6 million barrels, a minor drop in distillates by 0.1 million barrels, and an increase in gasoline stock by 0.2 million barrels.

The API’s findings come from a survey involving oil storage facilities and companies. In contrast, the official government report, due for release by the US Energy Information Administration (EIA), uses data from the Department of Energy and other agencies. This report includes detailed statistics on refinery inputs and outputs and provides insights into storage levels for various crude oil grades. The EIA report is considered more accurate and comprehensive than the API survey.

Influence On Oil Prices

Current geopolitical events are exerting a greater influence on oil prices than inventory data. The upcoming official report will provide further information which may impact market evaluations.

The American Petroleum Institute’s survey revealed a larger-than-anticipated draw in oil stocks, suggesting demand may be higher or supply lower than previously forecast. This came before the Energy Information Administration’s official figures, which are generally viewed as more thorough due to their broader and more regulated data collection process. The API’s numbers often provide an early signal but can deviate from EIA results, which means any positioning based solely on the API report needs to be approached with restraint.

The early impression we get, based on what was released, hints at tightening supply. With expectations of merely slight changes in inventories—practically flat in the case of distillates and gasoline—a sharp drop flips the outlook. However, it’s the broader context around international developments that appears to be steering market sentiment more forcefully at present, with local inventory changes playing a smaller role in price discovery than usual.

Looking to activity in derivative markets, tight inventory data combined with external pressures could stir volatility, particularly around settlement periods and ahead of economic or political announcements. Traders, particularly those active in front-month contracts, might see opportunity in short-term spreads where the draw on reserves pushes prices upward on the near end.

Implications For Traders

We believe forward price action should be focused on the short-to-intermediate term, with special attention paid to how spot pricing reacts to the EIA’s upcoming figures. Any divergence between API and government data should not be overlooked. It can be revealing, potentially flagging data corrections—or else hinting at real-world supply shifts not yet fully captured in longer-cycle figures.

If comparisons between the API and EIA data show deep inconsistencies, then calendar spreads and crack spreads that feed off supply assumptions should be reassessed. Volumes may increase if traders move to adjust delta and gamma exposure across duration.

It is also worth highlighting that the deviation from consensus in the private report could be a prelude to broader adjustment in sentiment once official numbers are confirmed. What looks like a simple draw today could translate to a wider repricing if upcoming data corroborates or amplifies the story. Watching basis movements across Brent and WTI will be especially helpful in judging where tensions are building geographically.

The underlying message is relatively clear: if official data confirms a sharper draw amidst unstable conditions elsewhere, then energy-linked contracts may see upward pressure, especially in options markets tied to volatility expectations. For put holders, premium erosion is a risk if the market stays bid. On the other hand, layered call spreads may become more valuable before being priced in.

We would watch closely how refiners adjust utilisation rates in the next two reports. If run rates escalate in response to tighter supply or improved margins, this could translate into further demand for feedstock, hitting inventories again.

In the coming sessions, it will be important to gauge momentum in heating and transportation fuels as well. Seasonal use patterns are beginning to shift, which would add another directional driver depending on product category.

Overall, this isn’t about a single storage number. It’s about how each evolving piece fits with the shifting directional pressure we’re seeing in contracts, both at the exchange and OTC level.

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