A private survey by the American Petroleum Institute (API) indicated a crude oil inventory increase, contrary to expectations of a 1.1 million barrel decline. The API survey, focused on oil storage facilities and companies, also expected distillates to increase by 0.1 million barrels and gasoline to decrease by 0.6 million barrels.

The official data from the US Energy Information Administration (EIA) is awaited for a complete picture. The EIA report, based on data from the Department of Energy, is considered more precise and offers additional insights into refinery operations and storage levels for various crude oil grades.

Api Inventory Update

This update from the American Petroleum Institute (API) reflects a rise in crude inventories, a move that goes against what the market had broadly forecast. Instead of drawing down around 1.1 million barrels, the API reported an unexpected build, which hints at softer-than-anticipated refinery demand or perhaps a slower pace in export activity during the surveyed period. We note that gasoline stocks were drawn down modestly, while distillates showed only a minor rise. That points to seasonal consumption shifts and possible changes in transportation fuel use—especially relevant as travel demand patterns tend to fluctuate around this time.

Given the timing of these numbers, many are now looking to the upcoming figures from the US Energy Information Administration (EIA). Unlike the API, the EIA collects its data directly from operators, providing a more comprehensive look not only at commercial storage levels, but also at refinery throughput, inputs by crude quality, and regional breakdowns. That level of granularity often influences pricing direction more sharply.

From a positioning standpoint, the misalignment between the API estimate and market expectations offers us a short-term signal. Inventory builds in this context often suggest weaker consumption or stronger domestic production. Either would weigh on prompt-month contracts and nudge the forward curve flatter. If the EIA confirms the build, the front end of the curve could soften further. In contrast, a drawdown from the EIA would likely trigger covering and rebalancing, particularly in the prompt futures.

Market Implications

Across calendar spreads, there’s a chance some short-term weakness will emerge if storage remains readily available and refineries are slower to pull. This is something we will be tracking closely. It’s also worth noting that refinery maintenance, though winding down in some regions, may still play a role in varying demand for feedstocks. That could skew the EIA numbers in ways a simple build headline doesn’t fully explain.

We therefore remain sensitive to how traders adjust in response to clarity from federal figures. Open interest trends appear stable but may shift quickly based on this week’s confirmation. Structurally, funds with a model-driven approach might need to reassess long bias if broader inventory dynamics continue in this direction.

In the short term, we continue to watch diesel margins, shipping activity along the Gulf Coast, and refinery throughput rates. Small surprises in each could move volatility higher. Energy options markets have been quiet, though risk is starting to reprice slightly at the front end. Traders holding structures close to expiry may need to consider rolling or hedging more actively depending on which way the official data goes.

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