U.S. crude prices fell sharply on Tuesday, but ratcheted upward overnight ahead of the week's U.S. Energy Department inventory report release.

There's a surprising embarrassment of riches, er, petroleum, in domestic stockpiles according to the latest government figures. This morning, the U.S. Energy Department's weekly inventory report showed across-the-board buildups in input crude oil supplies levels as well as stocks of finished products.

Tomorrow, the Energy Information Administration, the statistical arm of the U.S. Energy Department, will release its much-watched weekly inventory report. Today, traders will jockey to square their books ahead of the report, guided by goings-on in the trading venues and the industry-supported American Petroleum Institute's inventory estimates.

Real-time Monetary Inflation (last 12 months): -2.7%

Summer's officially here. Typically, this is the time when motorists steel themselves against the wallet-draining effect of higher petrol prices. Demand for motor fuel usually peaks at this time of year. Pump prices have, in fact, risen over the past week, but that's more likely a dead-cat bounce than the start of a genuine rally.

It's driving season, a time when motorists usually see gasoline prices rising. The wholesale market, however, is now turned upside down. Yesterday, gasoline cracks fell below those of middle distillates such as diesel and heating oil. Cracks represent the yields obtained from the sale of refined products versus the cost of crude oil inputs.

According to this morning's Energy Department inventory report, overall U.S. crude oil inventories were built up well above industry and Street expectations. Refined product stocks, however, declined across the board.

Republicans aren't the nation's only naysayers. This week, the industry-supported American Petroleum Institute said "no" to inventory builds in the oil complex. Moreover, the API estimated across-the-board declines in supplies. Analysts, for their part, were shopping for increases.

The industry-supported American Petroleum Institute is hitting 2-for-3 in its weekly inventory forecasts. API's gasoline and distillate fuel estimates were on-target this morning, though its call for a small decrease in crude oil stocks was a miss.

Guesstimates of America's fuel supplies by industry insiders differed only by degree this week. The American Petroleum Institute's survey data, released yesterday, indicated that domestic crude stockpiles probably rose by 421,000 barrels. Sell-side analysts were looking for a larger increase, between 2.4 million and 2.5 million barrels.

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