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.<\/p>\n
The data comes from the American Petroleum Institute\u2019s weekly report. It shows the latest change was higher than the previous reported figure.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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