A recent privately conducted survey indicates a notable increase in crude oil stocks, contrary to expectations of a decrease. The forecasts prior to the survey suggested declines of 2.1 million barrels in headline crude, 1 million barrels in distillates, and 1.7 million barrels in gasoline.
This survey was carried out by the American Petroleum Institute (API), which gathers data from oil storage facilities and companies. The official government report from the US Energy Information Administration (EIA) is expected the following morning and is regarded as more comprehensive, incorporating refinery inputs and outputs alongside storage levels for various crude oil grades.
Unexpected Shift In Inventory Trends
What we’re observing here is an unexpected rise in crude inventories, reported just ahead of the more widely followed government data. While traders had anticipated falls across crude, gasoline, and distillates, the private survey instead pointed to a build. That alone sends a rather direct message about short-term demand not quite matching prior estimates — or potentially, supply overperforming.
This kind of surprise matters. When expectations are positioned for drawdowns and the market instead sees accumulation, it tends to trigger a reassessment of several assumptions: refinery runs, throughput levels, international demand, even the pace of imports. All these are regularly priced in across the futures curve.
From our side, we’ve seen time and again that API results, while patchy in coverage, can serve as a market-moving preview, particularly in illiquid hours. However, it’s the EIA report — due shortly — that tends to be dissected more thoroughly. We’ll be watching for alignment between the two. Any wide divergence has historically led to short-term volatility in refined product cracks and front-month spreads.
Inventory builds offer more than just figures. They imply positioning risk, especially for traders who are long into expiry windows or holding structured spreads between products. When crude builds accompany stagnant or smaller-than-expected draws in gasoline and distillates, product margins tend to compress. This spills over into refinery stocks, option vols and seasonal pricing bets.
Focus Shifts To Refinery Throughput Metrics
Keen attention must now shift to refinery utilisation. If the government release confirms elevated run rates — and yet storage still rises — it may imply that products aren’t clearing as quickly as previous selling patterns suggested. That’s not inconsequential for those pricing summer demand profiles.
We should also think about whether higher-than-usual imports or strategic reserve adjustments factored into the data. If so, that shifts the short-term focus a bit — but if domestic production is rising quietly in the background, as it has on occasion, that injects further weight on the back end of the curve.
All eyes now turn to short-dated futures and outright put skew, which often react more viscerally to inventory beats or misses. The slight fragility in sentiment here could lead to gamma being repriced if the official numbers confirm the surprise.
There’s also the matter of positioning ahead of options expiry. With open interest clustered around a few key handles, even modest unexpected storage shifts could trigger follow-through momentum, particularly in thin overnight sessions.
Let’s not forget that this sort of data double-punch — a misaligned private survey followed by the possibility of confirmation — has seen sudden moves in the past. While we’re wary of overreaction, the prudent approach calls for an active posture in the near term. Better to have orders ready and exposures mapped out before the real numbers appear.
