Faced with a lower-than-expected weekly build in crude, investors turned instead to a huge gain in distillates, prompting a sell-off in oil on Wednesday.
The U.S. Energy Information Administration (EIA) said crude oil inventories increased 1144k in the week ending Jan. 9 compared to the +2750k consensus estimate. Meanwhile, distillate inventories surged 6346k in the same week compared to the +1000k estimate.
West Texas Intermediate crude oil is down $1.32 per barrel to $36.46, off its low of $36.10, which was hit following the data. Prior to the data release, oil had been at $37.30.
Phil Flynn from Alaron Energies said that despite the lower-than-expected build in oil inventories, oil prices will indeed continue to fall into the foreseeable future.
"Today is option expiration for the February crude. The bulls are trying to come out of hibernation and the charts are looking like it is another turning point. Inventories should keep the pressure on the downside but a surprise draw may tip today's cap to the bulls. Still, long term oil will go back down," he wrote prior to the data.
Meanwhile, Intercontinental Exchange (ICE) RBOB gasoline futures are up 6.48 cents per gallon to 114.89 cents, with gasoline inventories coming out in line with expectations. Heating oil at the ICE is down 5.00 cents per gallon to 146.26 cents.
In the mining sector, Chicago Board of Trade gold is trading down $10.40 per ounce to $811.40 USD. In Canadian dollars, gold is down $2.24 to C$1004.21. Silver contracts at the CBOT are down $0.36 per ounce to $10.40. Bloomberg's index for base metals is down 4.38 points to 113.23.
In the agriculture sector, wheat futures at the CBOT are down $7.75 per one hundred bushels to $563.00.
