Crude Dumps'n'Pumps Despite Massive Inventory Builds, Biggest Jump In Production In 20 Months

Tyler Durden's picture

After last week's massive product builds (and crude draw), API suggested additional builds ahead of DOE data which confirmed even bigger than expected builds in Crude, Gasoline, and Distillates. WTI gapped lower on the print then accelerated lower as US crude production rose by the most since May 2015. Then the algos decided it was time to rip oil prices higher (perhaps on indications of stronger demand)...

 

API

  • Crude +1.53mm (+1.5mm exp)
  • Cushing -187k
  • Gasoline +1.69mm
  • Distillates +5.48mm

DOE

  • Crude +4.097mm (+1.5mm exp)
  • Cushing -579k (+100k exp)
  • Gasoline +5.023mm (+2.75mm exp)
  • Distillates +8.356mm

Biggest crude build since November and another week of massive builds in gasoline and distillates...The 13.4 million barrel increase in total U.S. crude and refined products stocks last week is the biggest weekly gain since April 2015.

Notably:

  • U.S. CRUDE WEEKLY CRUDE IMPORTS RISE TO HIGHEST SINCE 2012: EIA U.S.
  • DISTILLATE STOCKS REACH HIGHEST WEEKLY LEVELS SINCE OCTOBER 2010: EIA

Demand improved somewhat last week, after a dismal performance in the last week of 2016. Over the last four weeks, consumption ran at a rate of 19.5 million barrels a day, up 1.3 percent over the same period of a year ago. Still, gasoline demand growth is lacklustre, but diesel consumption is improving.

Crude prices have slipped this week on, among other things, concerns of rising US crude production which exploded higher in the last week...The biggest surge since May 2015

 

The overall reaction was a huge gap lower in crude...

But then the machines took over...

Saudi output curbs create “situation where good news fails to halt profit-taking,” says Ole Hansen, head of commodity strategy at Saxo Bank. “In the short-term I maintain the view that the downside risk is the greatest due to the threat of long liquidation”

As Bloomberg's Javier Blas notes, first take the numbers with a certain degree of scepticism. Year-end factors plus fog in the Houston area are distorting the figures.

  • Said that, the U.S. energy market is yet to show signs of rebalancing, with crude, distillates and gasoline stocks all increasing. Total stocks jumped 13.4 million barrels, the most in nearly a year. That's great news for the bears.
  • The bulls took better demand figures as a reason to buy, however.

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hankwil74's picture

Uhhhhh.... crude plunged for about 2 minutes... it's now 35 cents higher than before the inventory number came out

Osmium's picture

Ya, they changed the title already.

jamesmmu's picture

I thought it will bring DOW down with it, apparently not!

SubjectivObject's picture

As the PoO goes up, we'll produce like a mofo.

Got bonds to pay, ya' see.

King Tut's picture
King Tut (not verified) Jan 11, 2017 10:46 AM

Crude has taken over title of Widow Maker Trade from NatGas

Bill of Rights's picture

Sort of like the $10 buck drive bye in gold on ZERO news...

Spifflove's picture

Silly goyum, fundamentals are for kids. 

GoinFawr's picture

Oil is a fundamental ingredient in practically every fun kid's toy, regardless of da ancient Abrahamic fairytales their mental parents indoctrinate them with when they put them to bed.

NoWayJose's picture

Somebody is going to be wrong - big time!

GoinFawr's picture

"Then the algos decided it was time to rip oil prices higher."

At a glance that action doesn't look like 'machine language' to me; call nanex first next time

jtlien's picture

Crude production up in Libya

Iraq ( especially Kurds) not going along. 

Production up in South Sudan.

Production up in Nigeria.

Guyana setting up oil production.

Trump to open up drilling, especially ANWR.

Japan putting reactors back online.

China pollution cutback.

China stops filling reserve.

Growing use of Electric Vehichles.

Even the crazy New Englanders turning to nat gas for winter heating.

Big finds of oil in Texas.

All bullish for oil.

RealistDuJour's picture

ZH is all over the negatives of a Cushing build... yet is suddenly incredulous when an algo "pumps" up oil on a Cushing draw...

Max Damage's picture

Erm look at the build down the line

orangegeek's picture

When CBs are put back on their leash ( after Jan 20 ) - these sorts of retarded market moves should end.

 

Many thanks to KKK grand master, barry Obama, for the 8 years of fucking hell that he has put the US through.

 

Here's to hoping you are shot dead in Chicago barry - with the rest of your kind.

hankwil74's picture

Agreed a doubling of the stock market sucks. How am I going to retire now?!

Bam_Man's picture

"The House Always Wins..."

Hohum's picture

At least you mentioned the 9.1M barrels per day of imports.  Refiners love imported oil!

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

south40_dreams's picture

Crude oil prices may be the most rigged object on earth

pndr4495's picture

"Then the algos decided it was time to rip oil prices higher(perhaps on indications of stronger demand)" What that statement says to me is that those pesky algos saw some big buy order - a legitimate one - come into the market & they simultaneously decided to front run that order. Any one trading CME's crude future or ICE's crude future better have both the hardware and the software to play in either of those sandboxes. Energy markets are dicorced from any other reality except order flow.

Sapere aude's picture

The reason oil went up is no one with any sense believes that the US oil industry can defy the laws of physics.

Impossible for oil production to have increased simply by virtue of legacy well declines.

More drawdowns from the SPR to the wellhead to artificially manipulate production is losing credibility as more and more realise its manipulation on a grand scale,  just like the paper gold, paper silver.

 

The US emperor has no clothes.

The saddest part about it, is it is a country with fantastic potential, fantastic technical innovation and a fantastic skill base, and to top that, is an agricultural cornucopia of plenty, with U.S. sacks of grain and rice always being prominent whenever famine strikes or devastation strikes.

The worst thing the US has done, is slow the space race. The moon landing whilst costing billions had spin offs of products worth ten times that much, and even today the U.S. should forget oil wars and concentrate on its strengths in all of the above.

The problem though is being exacerbated because when the masses start to dismiss oil figures, gold prices, silver prices,  as being rigged, then the game is up, and in all honesty its a game that should not have been played in the first place, as the US is better than that, or could and should be.