Analysis of the Impact of API Crude Oil Inventory Data and U.S. Treasury Auction on Market Sentiment

Indicator	Actual	Market Consensus	Deviation
Crude Oil Inventories	+5.27 million barrels	-2.0 million barrels	Significantly Bearish
Gasoline Inventories	+8.23 million barrels	Negative Consensus	Significant Inventory Build
Distillate Inventories	+4.34 million barrels	Negative Consensus	Continued Inventory Build

Indicator	Current Auction	Previous Auction	Change
Awarded Yield	4.825%	4.773%	+5.2bp
Bid-to-Cover Ratio	2.42x	2.36x	+2.5%
Allocated to Primary Dealers	12.0%	11.2%	+0.8%
Allocated to Indirect Bidders	66.8%	65.4%	+1.4%
Allocated to Direct Bidders	21.3%	23.5%	-2.2%

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API data shows that U.S. crude oil and refined oil inventories have seen a comprehensive and significant build. Crude oil inventories increased by 5.27 million barrels, far exceeding the market consensus of a 2.0 million barrel draw, marking the largest inventory build since late October [1][2]. Gasoline inventories rose by 8.23 million barrels and distillate inventories increased by 4.34 million barrels, indicating that U.S. refineries have clearly insufficient absorption capacity during the demand off-season.

Despite the clearly bearish data, oil prices have performed strongly supported by geopolitical risk premium. WTI crude oil futures broke through $60 per barrel, and Brent crude oil broke through $65 per barrel, surging for four consecutive trading days [2]. The main supporting factors include:

• Tensions between the U.S. and Iran: The U.S. has ordered its citizens to evacuate Iran, and the market is concerned about escalating risks of military action
• Iran-related sanctions: Trump imposed a 25% tariff on countries with business ties to Iran
• EIA Short-Term Outlook: The average WTI crude oil price for 2026 is expected to be $52 per barrel, an upward revision from the previous forecast

As of January 20, 2026, the Energy Select Sector SPDR Fund (XLE) edged up

on the day, performing relatively steadily and ranking among the top among major sectors [0]. This indicates that market sentiment has not shifted sharply due to the bearish inventory data, and the energy sector has shown a “resilient to declines” characteristic in the short term.

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1. Robust Demand
   : The bid-to-cover ratio rose from 2.36x to 2.42x, indicating improved market demand
2. Awarded Yield Lower than Expectations
   : The 4.825% yield was lower than the pre-auction trading level of 4.833%, indicating strong bargaining power of buyers
3. Optimized Investor Structure
   : The allocation ratio to indirect bidders (mainly overseas investors) rose from 65.4% to 66.8%, showing that overseas demand remains resilient

1. Upward Trend in Yields
   : The awarded yield rose by 5.2 basis points from the previous auction (4.773% → 4.825%), reflecting upward pressure on long-term interest rates
2. Increased Allocation to Primary Dealers
   : The allocation ratio rose from 11.2% to 12%, indicating an increase in the proportion of passive absorption by primary dealers and a weakening of spontaneous market demand
3. Decrease in Direct Bidders
   : The allocation ratio dropped from 23.5% to 21.3%, reflecting a decline in the willingness of some institutional investors to allocate to long-term Treasuries

The current U.S. Treasury yield curve shows flattening characteristics [0]:

Maturity	Yield	Daily Change
2-Year	3.57%	-0.6bp
10-Year	4.17%	-0.5bp
30-Year	4.80%	-0.1bp

Short-term interest rates are relatively stable, while long-term interest rates have fallen slightly, reflecting the market’s cautious expectations for the economic outlook.

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The current market shows a combination of “rising oil prices + mild decline in Treasury yields”, which usually implies:

1. Controlled Inflation Expectations
   : Despite geopolitical risks pushing up oil prices, the Treasury market has not seen significant inflation panic pricing
2. Rising Risk Aversion
   : Geopolitical uncertainty may attract some capital to flow into the Treasury market
3. Expectations of Economic Slowdown
   : The EIA expects oil prices to fall in 2026 (average price of $52 per barrel), and the market has already priced in demand slowdown

Market	Sentiment Indicator	Driving Factors
Energy Sector	Neutral with a Cautious Tilt	Bearish Inventory Data + Geopolitical Support
Fixed Income	Neutral with a Bullish Tilt	Robust Auction Demand + Expectations of Yield Peaking
Overall Market	Risk Averse	Tech Stocks Led the Decline (-0.51%) + Utilities Plummeted (-2.95%)

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• The unexpected surge in inventories puts pressure on short-term oil prices, but geopolitical risk premium provides support
• It is recommended to pay attention to oil and gas companies with upstream assets to hedge against price fluctuation risks
• Closely monitor this week’s official EIA inventory data (released on January 15) [2]

• The results of the 30-year Treasury auction are acceptable, and yields are close to a periodic peak
• In the short term, consider appropriate allocation to long-term Treasuries to capture capital gains from declining yields
• Pay attention to next week’s Federal Reserve interest rate decision (January 26) [0]

1. Escalation of Geopolitical Risks
   : Conflicts between the U.S. and Iran may further push up oil prices and disrupt market sentiment
2. Continued Deterioration of Inventory Data
   : If API/EIA inventories continue to surge significantly, it may trigger a correction in oil prices
3. Weakening Demand in Treasury Auctions
   : A decline in the bid-to-cover ratio may push yields higher
4. Rebound in Inflation Expectations
   : Rising oil prices coupled with tariff policies may push up inflation expectations

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shows significantly bearish characteristics, but geopolitical risk premium provides support for oil prices, and the energy sector has shown a “resilient to declines” pattern in the short term. results show robust demand, with an increased bid-to-cover ratio and an awarded yield lower than expectations, which constitutes mild support for fixed income market sentiment [3].

Overall, the market is currently in a state of “coexisting risks and opportunities”: geopolitical uncertainty supports energy prices, but inventory pressure and interest rate environment restrict risk assets. It is recommended that investors remain cautious and pay attention to the upcoming EIA inventory data and CPI inflation data.

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[1] Trading Economics - U.S. API Crude Oil Stock Change (https://zh.tradingeconomics.com/united-states/api-crude-oil-stock-change)

[2] Sina Finance - API Data Shows Significant Build in U.S. Petroleum Inventories (https://finance.sina.com.cn/money/future/fmnews/2026-01-14/doc-inhhfmkz8567727.shtml)

[3] Sina Finance - 30-Year U.S. Treasury Auction Awarded Yield at 4.825% (https://finance.sina.com.cn/stock/usstock/c/2026-01-14/doc-inhheyvm4529365.shtml)

[4] Investing.com - 30-Year U.S. Treasury Bond Auction (https://cn.investing.com/economic-calendar/30-year-bond-auction-572)