WTI/RBOB Slide After Crude Inventory Hits Record High, Production Tops 9 Million Barrels

Tyler Durden's picture

After API's surprise draw across all major categories, DOE reported the 7th weekly crude build in a row (even as crude imports plunged). Gasoline, Distillates, and Cushing all saw draws even as crude production rose to new cycle highs - back above 9mm bbl/d.

So here is a question for the crude bulls from Bloomberg's Javier Blas: the U.S. imported way less crude last week (down 1.2 million b/d week-over-week, to 7.3 million b/d) and exported again lots (1.2 million b/d, or nearly 100,000 b/d week-over-week). And yet, crude stocks build-up again. So where's is the rebalancing?

API

  • Crude -884k (+3.3m exp)
  • Cushing -1.7mm
  • Gasoline -893k (-1.5mm exp)
  • Distillates -4.229mm

DOE

  • Crude +564k (+3.25m exp)
  • Cushing -1.528mm (-50k exp)
  • Gasoline -2.628mm (-1.5mm exp)
  • Distillates -4.924mm (-1.0mm exp)

7th weekly crude build in a row but major draws across the other categories...

Notably, Bloomberg's Javier Blas points out that U.S. refinery intake traditionally reaches a seasonal bottom between the second half of February and the first half of March. Last week intake, at just 15.5 million, was already low already and any further reduction would make a big increase in crude stocks more likely. Refinery Utilization tumbled to its lowest since April 2013...

Furthermore, some crude that was on floating storage in so-called contango deals is coming now in-land, increasing imports; but U.S. Crude oil exports rose above one million barrels a day for the first time on record the week ended Feb. 10. WTI averaged $2.26 a barrel below global benchmark Brent this year, making U.S. crude more attractive to overseas buyers.

As a reminder, US crude inventories are already at a new record high...

 

As are gasoline inventories...

Gasoline demand rose in the last week but remains down over 5% YoY...the biggest drop in 16 years.

 

Production remains on a rising trend - back above 9mm barrels/day, tracking the lagged rig count and suggesting - noise apart - considerably more production to come...

 

Bloomberg's Javier Blas concludes:

I don't see yet any sings of the U.S. domestic oil market rebalancing, despite the best efforts by OPEC. What's becoming more and more clear is that the domestic industry is ramping up activity faster than most have predicted. OPEC cuts have lifted prices and created space for U.S. production overseas. OPEC failed to kill shale, and now it's throwing it a big economic incentive to prosper.

WTI and RBOB rallied overnight following the API data and while both initially spiked on the print, they are falling now.. what will happen 15 minutes after?

 

Finally we remind readers of what happens next...for the last four weeks, bang on at the 3:45 pm London time (15 minutes after the DOE release), the algo emerged when bearish EIA figures also triggered buying.

Just like it did last week...

 

And the week before...

 

And the week before that...

*  *  *

No buying panic today yet...

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Soul Glow's picture

The oil market could bring all asset prices down.  FUnny though that inflation is running so high stocks are at highs, gold stays above $1200, and the dollar stays high too.  Compared to oil....well if other asset classes come down to where oil is....boom.

Government needs you to pay taxes's picture

ARAMCO IPO must not be distrubed.  More war in the Middle East, bitchez!

Sonny Brakes's picture

Why now? What have we done to deserve such generosity?

GUS100CORRINA's picture

One thought: INSANITY IN THE ENERGY MARKETS!!

PEOPLE (and MACHINES) have lost their collective minds!

Markets are irrational and WILD like a DRUNK with a bottle of WHISKEY.

So much for the OPEC cuts.

Dr. Engali's picture

Keep this up and soon you'll get a free barrel of oil with every fill up.

SelfGov's picture

Free? Shit, each barrel costs $65 to produce.

Joe Sichs Pach's picture

At over 9mm b/d they're totally making it up on volume

 

 

 

/sarc

John Kerry-Heinz's picture

The greatest financial scam of all time, OIL.  Without it fiat could not exist.

SelfGov's picture

Without it there would have been no economic growth between 1950 and today.

Some scam.

John Kerry-Heinz's picture

I take it you have lost alot of money on the wrong side of the drilling "Scam".

SelfGov's picture

Haven't had a negative trading day in my life.

Hohum's picture

Although the speculators were not effective until 1973, nor from 1986-2002.

Cloud9.5's picture

I think the reverse Is true.  Were it not for debt, i.e., magicly conjured money, oil would not exist.

Sonny Brakes's picture

I think the answer to this problem is money. Now, this may just be me having my head against a hundred-degree furnace for an hour, but... consumers have found their opportunities, to earn a living wage, missing. So that makes affording expensive gasoline a problem. Is this right?

Hohum's picture

There are lags, to be sure, but price up 75% year over year, rigs up 45% YOY, and production up <10% YOY.  It's a child scraping the icing off the sides of the bowl.

Farmerz's picture

Great news! Colmes is dead. Major league POS

g&#039;kar's picture

This can only mean new highs for oil

TalkToLind's picture

I have noticed acres of new cars parked in the grass at my local car dealerships. Who will buy all of this oil if no one is buying cars?  

U4 eee aaa's picture

Those tanks still need gas in 'em

/sarc

Joe Sichs Pach's picture

You may be on to something.  Govt subsidising auto dealers to fill up all the tanks of the cars on the lot?  There's your "hidden demand".

NotApplicable's picture

Around here the car dealers rent out all of the unneeded parking spaces from strip malls, bowling alleys and any vacant business property with a parking lot.

Every dealer in town has at least one of these "satellite lots."

tbone10's picture

Oh sure it's gonna go sky high....What a dipshit you are!!! Dumbass!!!

U4 eee aaa's picture

When are the hedgies going to get their knuckles cracked. You should include charts on where the oil hedge contracts are when you do this