WTI Slides After API Reports Massive Build In Gasoline & Distillate Inventories

Tyler Durden's picture
Submitted by Tyler Durden on 01/12/2016 16:37 -0500



 

With the seasonally drawdown-prone December completed, we begin seasonally build-prone January with expectations for a 2mm barrel build. However, according to API, both total and Cushing inventory levels tumbled (-3.9mm and 300k respectively). Great news - so why is crude tumbling? Simple - massive builds in end-products again with Gasoline up a massive 7mm barrels and Distillates up 3.6mm barrels. Having ramped off sub-$30 levels aftwr NYMEX closed, and lifted by the Iran-US news, WTI is sliding back rapidly.

The largest 2-week Gasoline invenrtiory build ever...

 

And so while algos saw the inventrory draw headlines, real traders know what record-breaking builds in end-product means...

 

December saw a very flat inventory overall (despite being a seasonally extreme period for drawdowns into year-end tax planning)...

 

Judging from history, as Bloomberg notes, it should resume as soon as the festive season is over: Stocks have built by 3.2 million barrels on average in January since 1921.

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Tue, 01/12/2016 - 16:41 | 7036975 _ConanTheLibert...
_ConanTheLibertarian_'s picture

WOW let's do another WTI collapse/slide article. LOL.

Tue, 01/12/2016 - 16:44 | 7036994 mandalou
mandalou's picture

the API releases its report at 430pm est. It moved 35 ticks in 2 seconds to 31.05. Then down 55 ticks in less than 5 minutes. 55 ticks is actually the normal range of a 30 minute period in NYMEX regular session hours. So yeah, seems drastic to me.

Tue, 01/12/2016 - 16:47 | 7037019 SILVERGEDDON
SILVERGEDDON's picture

Well, at least 30 oil price slide articles got us to a thirty dollar handle on oil - so, if we get moar articles, then the price should start to ramp up.

Right ?

RIGHT ?

Okay, be right back - I gotta buy a lottery ticket.

Tue, 01/12/2016 - 16:41 | 7036978 mandalou
mandalou's picture

We hit 31 during API release. Finally by NYMEX close at $30.44.

Tue, 01/12/2016 - 16:44 | 7036995 BandGap
BandGap's picture

The military consumes a LOT of gasoline.

Tue, 01/12/2016 - 17:01 | 7037108 Whootie_who
Whootie_who's picture

actually the US military almost exclusively only uses kerosene.. similar but different ...

Tue, 01/12/2016 - 17:02 | 7037119 BandGap
BandGap's picture

It's all a matter of chain length.

Wonder if this slice of the distillates is quantified in this report.

Tue, 01/12/2016 - 17:12 | 7037179 abyssinian
abyssinian's picture

well two Navy boats just got captured by Iran, that should kill oil consumptions 

Tue, 01/12/2016 - 16:45 | 7036999 Wulfkind
Wulfkind's picture

Where are all the Happy Motorers ? Truckers? Help me out here !!!!! We NEED DEMAND !!

Obama

Tue, 01/12/2016 - 16:47 | 7037021 Mark Mywords
Mark Mywords's picture

So this should be good for another 10 S&P points tomorrow, as oil and stawks always move in tandem in the same direction as the other.

Oh...

Tue, 01/12/2016 - 16:48 | 7037025 khnum
khnum's picture

Just who is the Dr Evil thats going to own all these energy stocks for pennies in the dollar 

Tue, 01/12/2016 - 16:58 | 7037079 InsanityIsWinning
InsanityIsWinning's picture

Indeed and that will lower the cost curve for the entire U.S. industry . . . take that Saudi A.  Their tactic of bankrupting the shale industry will just force better efficiencies from U.S. producers.

Tue, 01/12/2016 - 16:59 | 7037098 Hohum
Hohum's picture

One hopes that this "efficiency" means it won't take thousands and thousands of wells over the next year to keep production constant.

Tue, 01/12/2016 - 18:42 | 7037613 silverer
silverer's picture

Yes, that's another drawback.  New wells produce more.  Don't know what it costs to move and set one up, that's the key.

Tue, 01/12/2016 - 18:41 | 7037611 silverer
silverer's picture

Never thought of that.  I guess there would be some gain. You certainly would try to think of those things if the money isn't easy anymore.

Tue, 01/12/2016 - 16:52 | 7037063 Gregory Poonsores
Gregory Poonsores's picture

Bullish for clicks!

Tue, 01/12/2016 - 16:58 | 7037093 Hohum
Hohum's picture

It's like the crude oil changed into gasoline and diesel through some magical process.

Tue, 01/12/2016 - 17:00 | 7037103 roisaber
roisaber's picture

I don't think oil's going back up until You Know Who blow up the Moon, and even that should only be good for a few days' worth.

Tue, 01/12/2016 - 17:12 | 7037181 Exit through th...
Exit through the gift store's picture

We should use all that extra gas to fuel the economy... this recovering economy is acting like its out of gas.

 

Tue, 01/12/2016 - 18:40 | 7037601 silverer
silverer's picture

Make gasoline a legal insecticide.  Lol

Tue, 01/12/2016 - 17:34 | 7037292 Squid Viscous
Squid Viscous's picture

buy any sub 30 WTI print, and thanx me later

 

Tue, 01/12/2016 - 19:41 | 7037847 Davilis
Davilis's picture

Ha Ha Ha, any data that supports lower prices will be trumpeted. Oh ZH, what a shill you have become. But getting desperate... only barely able to push a "OMG lower than 30" number today. The snap-back is looming.

Wed, 01/13/2016 - 00:09 | 7038887 MrSteve
MrSteve's picture

The price change pressure builds as the last empty storage tanks fill up. Once they're full, a tipping point is reached and then all the distillates become Must-Move-Now inventory, so it gets marked down, like K-Mart used to do for blue light specials.

"Lower prices now" marks the beginning of the end of the cycle because of the "uneconomic" production. This is when the cure for low prices happens.

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