Forecasting changes in weekly oil inventories can be a dicey business. Sometimes the estimates made by the industry-supported American Petroleum Institute and sell-side analysts are widely disparate; sometimes they coincide. And sometimes, like this week, they can be on either side of the numbers posted by the U.S. Energy Department.

Yesterday, the American Petroleum Institute said crude inventories likely rose 4.7 million barrels.

Analysts, however, foresaw more modest builds. Oil Patch observers were all over the board, with median estimates ranging from no change to an increase of 400,000 barrels.

Actual inventories, according to Energy Department figures, were somewhere in the middle of the forecast range—an increase of 2.3 million barrels. With stocks now at 329 million barrels, domestic supplies remain above average for this time of year.

In anticipation of the government supply report, NYMEX March crude oil was modestly higher overnight but flattened out near the day session's opening.

Crude oil ran up a three-day winning streak Tuesday, rising 3.8 percent as fresh buyers poured into NYMEX contracts following Monday's short exodus. Oil prices were bolstered by a decline in the U.S. dollar and reports that OPEC would be unlikely to change oil production quotas at its meeting next month in Vienna.

Analysts did better with their forecast of an 800,000- to 1-million-barrel drawdown in distillate stocks. The government reported an actual 1-million-barrel decrease.

They were on the wrong side of the gasoline numbers, though. The Street's forecast of a 1-million- to 1.3-million-barrel increase in gasoline inventories was skunked by Energy Department figures showing a 1.3-million-barrel decline.

Analysts also predicted refinery usage would remain unchanged at 78.5 percent of capacity, but the Energy Department said utilization actually dropped to 77.7 percent. Gasoline production decreased to an average 8.6 million barrels a day, while daily distillate fuel production, including the refining of diesel and heating oil, declined to 3.5 million barrels.

Refinery Usage Vs. Refining Margins

Government figures showed gasoline demand averaging 8.6 million barrels a day, a 0.5 percent decline from year-ago levels, while daily consumption of distillate fuels, at 3.7 million barrels, is down by 9.1 percent.

Crack spreads narrowed slightly this week as spreads for gasoline-rich 3-2-1 operations fell to $10.84 a barrel—a 14 percent margin. Distillate-heavy 2-1-1 refiners looked at a $10.22 crack, or a 13.2 percent margin.

The premium for lighter, sweeter West Texas Intermediate crude (vs. North Sea Brent) fell from $2.06 a barrel to $1.85 this week.

A three-month NYMEX roll cost an average $1.64 a barrel, up from last week's $1.51. The annualized cost of carry implied by the market's contango is 304 basis points.

Technically, the stochastics RSI indicators have turned positive for March crude, though a trend shift hasn't yet been confirmed by MACD. Bulls have put a retracement level of $77.96 in sight as an interim objective, which fairly well coincides with the present 50-day moving average. Consider that resistance. Support's likely at the 10-day moving average at $75.51.