US weekly crude oil stocks from the API fell by 0.609 million barrels for the week ending 13 February.
The previous week recorded a rise of 13.4 million barrels.
Reversal In Inventory Signal
We’ve seen a sharp reversal in sentiment with the latest API data showing a crude draw of 0.609 million barrels. This comes directly after a massive build of 13.4 million barrels, which suggested a heavily oversupplied market. This unexpected tightening points to stronger near-term demand than previously thought, creating upward pressure on prices.
This inventory draw aligns with the recent polar vortex that moved across the Northeast, boosting demand for heating oil, a key distillate product. U.S. refinery utilization rates have also ticked up to 86.2% as of early February, a notable increase as facilities conclude seasonal maintenance. Refineries are pulling more crude to meet anticipated demand for the spring driving season.
This kind of weekly volatility reminds us of the market conditions we saw back in late 2024. During that period, conflicting signals from Chinese economic data and OPEC+ production discipline caused similar price swings. It serves as a reminder that one data point isn’t a trend, and we need to watch for confirmation in the official EIA report.
The conflicting data is increasing implied volatility, with the oil VIX (OVX) now pushing 38, its highest level this year. This makes options strategies like call spreads attractive, as they allow for capturing upside potential while defining risk in an uncertain environment. We are positioning in the April WTI contracts to see how these supply and demand factors settle over the next month.
