Massive Crude Inventory Drop of 12 Million Barrels: API

That 12 million barrels must have evaporated. Or somehow a number was misreported. The API gets its data voluntarily from refiners, bulk terminal owners, and pipeline companies.

Analysts at Platts have estimated that last week’s crude supply fell by 1.25 million barrels, that gasoline inventories are down 119,000 barrels, and that distillate supplies are up 540,000 barrels.

U.S. refinery capacity had been running at about 90% of capacity, so unless something really weird is happening to all that crude the API number has got to be the result of erroneous reporting or some other vast anomalous event. API does not offer any explanation for the massive drop in crude inventories.

In the week ending November 22nd, the U.S. produced about 8 million barrels of crude a day and U.S. inventories rose by 3 million barrels that same week. No supply reduction of sufficient magnitude has been reported, no pipeline has stopped flowing, and no refinery has experienced an unexpected shutdown.

And it has been illegal to export U.S.-produced crude oil since the mid-1970s. If the crude is leaving the country, it is being smuggled and it’s really hard to hide a VLCC that holds about 2 million barrels of oil.

There is no logical explanation for a drop of 12 million barrels, so we’ll just have to wait to see what the U.S. Energy Information Administration has to say when its report on crude inventories is published tomorrow.