US weekly crude oil inventories rose by 11.4 million barrels in the week ending 20 February. This follows a rise of -0.609 million barrels in the prior week.
The data comes from the American Petroleum Institute’s weekly report. It shows the latest change was higher than the previous reported figure.
Crude Inventory Build Signals Oversupply
We’ve seen a huge build in crude inventories, hitting 11.4 million barrels last week. This is a sharp reversal from the small draw we saw before and points to a significant oversupply in the market. The immediate reaction will be bearish, likely pushing oil prices lower.
This inventory swell is happening as U.S. refinery utilization rates have dipped to around 86% for seasonal maintenance. At the same time, domestic production remains robust, hovering near a record 13.3 million barrels per day according to the latest government data. This combination of lower processing and high output is what’s causing stocks to build so quickly.
We should consider buying put options on WTI or selling front-month futures contracts to capitalize on expected price drops. Bear put spreads for the March and April expiration dates could be a cost-effective way to express this negative view. This strategy allows us to profit from a moderate decline in prices while limiting our upfront cost.
We saw a similar pattern of surprise inventory builds back in the spring of 2025 when refineries were slow to come back online from turnarounds. At that time, front-month crude prices fell over 8% in the following two weeks before demand began to recover. That historical precedent suggests this current weakness could persist for several weeks.
All eyes will now be on the official EIA inventory report to confirm the size of this build; a similarly large number will accelerate the sell-off. We are also watching the market structure shift deeper into contango, where later-dated contracts trade at a premium to the front month. This signals that the market is well-supplied and further confirms the bearish outlook.
