In another development, the American Petroleum Institute (API) reported a significant build in US crude inventories on Wednesday. This was unexpected by analysts who had predicted a 3.4 million barrel draw for the week ending August 22. The actual build was over 600,000 barrels, coinciding with the end of the summer driving season. According to the US Energy Information Administration (EIA), US crude stocks had been rising for weeks before beginning to fall only in the second week of August. Although API has released its data, the EIA has not yet published its own report on US crude stocks.
Meanwhile, tensions have been growing in the Caribbean Sea over the last couple of weeks as the United States has increased its military presence off the coast of Venezuela, a country with the world's largest proven oil reserves. Venezuelan President Maduro, who has a $15 million bounty on his head, believes this military build-up is a pretext for an invasion and regime change. He has stated that his troops would fight back and that any invasion would affect all of South America.
While a full-scale invasion is unlikely, the US appears determined to change the status quo in the name of fighting what it calls "narco-terrorism." A recent US Navy action involved the destruction of a speedboat carrying what the US identified as "narco-terrorists" and drugs. If the tension in the seas around Venezuela escalates, it would impact the price of crude oil, as the country still contributes to global markets despite sanctions.
At the same time, there is no sign of a decrease in Russian oil imports by India and China, despite the US imposing a 50% tariff on Indian goods. While India has not retaliated in kind, there is a clear frustration in the Trump administration, which seems unsure of its next move with the world's most populous country. With a combination of these complex factors, it is difficult for oil prices to break free from their current stable state.
