Crude Soars Above $47 After Biggest Inventory Draw Since 1999

Tyler Durden's picture

Following last night's API-reported 12mm barrel drawdown (the most since 1999) - attributed to last week's Gulf shut-ins due to tropical storm Hermine - EIA reported an even bigger 14.5 million barrel draw. Production fell for the 3rd week and Distillates saw a big inventory build but the headline crude build dominated algos which spiked WTI above $47.

API

  • Crude -12.08mm (exp +905k)
  • Cushing -0.7mm (exp -900k)
  • Gasoline -2.388mm (exp -750k)
  • Distillates +944k

DOE

  • Crude -14.5mm (exp +905k)
  • Cushing -434k (exp -900k)
  • Gasoline -4.2mm (exp -750k)
  • Distillates +3.38mm

The breakdown of crude imports, which dipped 21% to 7069k b/d from 8917k last week, and the lowest since November, by region was as follows:

  • PADD1: 581k vs 1239k, -53.1%
  • PADD2: 2468k vs 2566k
  • PADD3: 2478k vs 3237k, -23.5%
  • PADD4: 333k vs 236k
  • PADD5: 1209k vs 1639k

The EIA added that Gulf Coast (PADD3) crude imports fell to 2.48m b/d, the lowest since at least 1990.

Distillates saw a big build.

API's reported 12mm draw (which made sense in the context of major draws during 2008 and 2013 storm seasons in the Gulf) and DOE confirmed it with the biggest draw since Jan 1999...

Unexpectedly large drop in U.S. crude imports, which led to falling inventories and price surge, was due to Tropical Storm Hermine, and thus could be temporary phenomenon that may reverse, according to Commerzbank and other analysts.

 

Following Crude production's sudden dramatic rise 3 weeks ago, US production has fallen back for the 3rd week.

 

Gasoline stocks declined further, dropping by 4.2mmbbls to 228 million in the week ended September 2.

 

East coast gasoline stocks likewise fell notably, declining by 2.3mmbbls to 64.9 million in the past week.

 

Following last night's post-API gains, Iran comments combined with Draghi's letdown were weighing on prices before the EIA data hit, which then exploded above $47.

 

As Bloomberg noted,

“It’s the numbers from last night that are pushing up oil prices,” says Gerrit Zambo, trader at BayernLB in Munich.

 

“Even if we see a bullish number this afternoon I wouldn’t bet on rising prices for too long”

The question is with the temporary storm shutdown over, and rigs back to work, just how big the rebound next week will be.

The Algos may have run out of steam...

Charts: Bloomberg, Reuters

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flaunt's picture

Next stop > $55! 

Soul Glow's picture

Trading made easy.  Do the opposite of Gartman and buy the 3:00 ramp job.  A blind pig could be a day trader now.

froze25's picture

End of the Day, short and short hard. In my humble opinion. We all know storage is running out still, tick toc, tick toc.

Soul Glow's picture

End of the day stack silver coins.  Cheap compared to inflated asset classes and no counter party risk.

svayambhu108's picture

> due to Herminne

wait till you meet: Ian, Julia, Karl, Lisa, Matthew, Nicole

espirit's picture

Riyadh here.

We need a few Scuds launched from Yemen to head your way.

Copy that, New York.

offwirenews's picture

so who exactly puts together the oil reports? The same honest people putting together the labor statistics? 

espirit's picture

This is bullshit. No reduction at the pump after the last excess build, so refined is gonna go up again after this latest drawdown.

Drive less or none at all, you fucking algobots.

 

WooHoo, retail is going to suck wind again this year.

offwirenews's picture

no discount for the peasants. That'll teach them to drive a car that's not aligned with agenda 21.

King Tut's picture
King Tut (not verified) espirit Sep 8, 2016 12:11 PM

But BofA's CEO was on CNBS this AM telling everybody the retail consumer is back- I guess he forgot to tell Dollar General, Target,  Macy's etc. that nugget of info

LawsofPhysics's picture

LOL!!!  The "Gartman effect"!!!

Do you see what happens when you fuck with price discovery!!!!

MFL8240's picture

Fucking clown!  The rigging of markets to feed the ambitions of the tribe to destroy wealth is so godamn odvious, what the hell are the American people waiting for.  Time to unravel this web of deception.

offwirenews's picture

cue the intra-day v-shape

Hohum's picture

Imports down -1.8 M barrels per day from last week.  It explains everything--a one off event:

http://ir.eia.gov/wpsr/wpsrsummary.pdf

LawsofPhysics's picture

"a one off event" ...

 

I think that depends on whether or not the producers we are buying from are still accepting FRNs....

"Full faith and credit."

Hohum's picture

Yes, it is.  And imports will be back at 8.5M barrels per day in next week's report.  More generally, consumers should rejoice that they enjoy oil below the marginal cost of the highest cost producer.

rejected's picture

The over all jist of this tune applies here.

https://www.youtube.com/watch?v=UPgS26ZhqZs

Pasadena Phil's picture

So now we have to get ready for the inevitable "record increase in oil inventories" headlines as the hurricane effect works through the system. Because hurricanes never happened before this year. We sure be dumb. It's all BS. Properly explained, the oil flow is not any more unstable than it has been for many years. It's the punditry that has gone volatile to cover the speculation activity.

south40_dreams's picture

Somebody's set up to make a buck

King Tut's picture
King Tut (not verified) Sep 8, 2016 11:21 AM

40 cent jump-at-the-pump this afternoon- Check!

Dark Daze's picture
Dark Daze (not verified) Sep 8, 2016 11:22 AM

So, if this is a real draw down and not some more bullshit, where is the corresponding rise in CAD. I guess the fucking jews are short a few dollars these days.

NDXTrader's picture

Algos create great trading opportunities since they don't get jokes or context. These numbers are a farce due to the tropical storm. Everyone knows that except the true traders of oil: the machines. Interesting dilemna for TPTB - they've been using the oil correlation to pump stocks, but they can't let gas get too expensive before the election

espirit's picture

Well then, time to short the shit out of it.

adr's picture

$3 up in crude for no real reason.

Question, if Iran wants to freeze production levels once they start outputting at their pre sanction level, which will actually freeze oil production at a higher level than what gave us the largest supply glut in history, HOW IS THAT BULLISH FOR OIL PRICES?????

If current production levels, and even lower 2015 production levels, gave rise to the current market imbalance, freezing output will not decrease global oil supplies.

Only in Wall St lala land can adding to a supply problem with more supply be seen as bullish.

Oil went from $16 a barrel to $50 without dropping oil supplies below any point from 2015, which 2015 was already far above 2014, 2013, and going back decades. A freeze could perhaps drop production lower than 2016 levels going into 2017, however this would only be bullish in the context of 2016's massive supply glut.

But using Wall St logic a lesser supply glut is actually a supply shortage and supportive of oil's move back to $100.

It is my belief that this move lower was engineered to massively increase profit margins resulting from people getting used to paying $2.30 on $45 oil. A level that used to correlate to oil around $90. This will allow gas prices to climb above $4 on $80 oil. If oil ever breaches $100 again we could be looking at $5 gas even though $147 per barrel barely got us above $4 gas in 2008.

Malus's picture

Its amazing the amount of bs stories that can be invented to explain the rise/fall of oil. We are being played.....

roadhazard's picture

Next article will be crude going down. I got this shit figured out.

alangreedspank's picture

Equities trading in very tight range, with little to no volume. Everyone is busy betting on oil and gold, which are the only things that moves lately.

83_vf_1100_c's picture

Sorry guys, I filled up the SUV last week.

USofAzzDownWeGo's picture

Blah blah blah, i don't care about any numbers or what this country said or is gonna do... all i care about is what FARTMAN said and do the opposite of him.