WTI/RBOB Jump On Largest Crude Draw In 2017 Offset By Major Product Build, Rising Production

Tyler Durden's picture

Update: As expected the machines finally noticed the huge builds in products and RBIOB has erased its kneejerk gains...

*  *  *

As we detailed earlier, WTI/RBOB prices were at the lows of the day after last night's huge surprise inventory data from API, but kneejerked higher after DOE reported a surprisingly large crude draw (the biggest since Dec 2016. However, it's clear that refineries are on fire as gasoline and distillates inventories surged by the most in at least 3 months. US crude production rose once again to its highest since August 2015.

API

  • Crude +897k (-1.75mm exp)
  • Cushing -1.971mm - largest since Feb 2014
  • Gasoline +4.445mm (+500k exp) - largest since Jan 2016
  • Distillates -36k

DOE

  • Crude -3.64mm (-1.75mm exp) - biggest since 2016
  • Cushing -1.203mm
  • Gasoline +3.369mm (+500k exp) - biggest in 3 months
  • Distillates +2.651mm (-1mm exp) - biggest since first week of Jan

As Bloomberg notes, the U.S. refining system is absolutely on fire: up another 347,000 barrels a day last week to 17.3 million barrels a day processing. It's huge. And that explains the major builds in products (gasoline/distilates) and surprise draw in crude...

 

Crude stocks fell -3.6 million bbl to 529 million bbl last week, a faster draw down than normal at this time of year.

As Reuters adds, crude stocks tightened last week by about -5.7 million bbl compared with 2016 and -7.6 million bbl compared with 10-yr average

Crucially, as Bloomberg's Javier Blas details: Saudi Arabia cutting production? Not much, if you believe the U.S. oil imports figures. Last week, the U.S. bought from the kingdom 1.19 million barrels of oil, up from 1.18 million barrels the previous week. Imports from Kuwait and Iraq also rose last week. So far, OPEC cuts are not really translating into lower U.S. imports from key players in the Middle East.

US Crude production continues to trend higher with lagged rig counts - now at the highest level since Aug 2015 (and on pace for record production levels by the end of July 2017 if this trend continues).

Prices were already retesting the post-API lows heading into the DOE priont but price for both WTI and RBOB snapped higher (despite the major build in the latter)

 

As Bloomberg's Javier Blas notes, the market is starting to lose faith in the re-balancing story, with hard data not showing yet a significant draw in inventories (particularly of crude). In the meantime, U.S. production (weekly figures) continues to march up. In recent weeks, the EIA has pegged U.S. domestic output growing at 30,000-50,000 barrels a day and further confirmation of the growth will undermine the bulls.

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LawsofPhysics's picture

Again, talking about "prices" in the absence of a mechanism for true price discovery is retarded, never go full retard!

Grandad Grumps's picture

People will comprehend the lie(s) eventually.

poland spring's picture

No they won't. I once thought that. Then travel on public transportation or walk into a Walmart.  They won't, honestly, they won't.

LawsofPhysics's picture

^^^this.  history is also pretty clear on this as well. The math is what it is and exponential equations are a real motherfucker. Time to thin the herd.

Kefeer's picture

Everyone alive that can read this will be dead within 75-100 yeaars; death is not a respector of persons.

LawsofPhysics's picture

So fucking what?  Irrelevant.  Look at how the majority of the population "lives"...

that which cannot be sustained, never is.

same as it ever was...

Valuator's picture

Oil inventories are on a supply curve.  They will collapse as the price declines.

Nothing will matter when panic sets in as China takes the world down again, and soft data collapses.  Oil will be sold with the rest of risk.

LawsofPhysics's picture

Paper oil or the real stuff?

Tell me, do you think there is any real vlaue in having access to reduced hydrocarbons and consumable calories? After all this is what oli really is!!!

Bill of Rights's picture

Ahh yes the fake Oil market and fake Oil price continues to play on the fake masses.

Bill of Rights's picture

Take your lefty bullshit else where... like it matters who farts in the big chair.

FreeShitter's picture

So you contradicted yourself again...lmao....how's the miner stocks?

Squid Viscous's picture

perfect, we needed something to keep the Spooz up here, month end coming soon

Turin Turambar's picture

Gotta keep oil price propped up above at least $50 for the Saudi ARAMCO IPO. Sitting on ERX 31 calls myself that expire Friday. Have CONfidence in the manipulation.

Ink Pusher's picture

I love these alleged "drawdowns" of course there's no oil left the inventory, it just got pumped to another tank that is not registered and a short paper trail got created which will be classified as proprietary.

The method : click, type,copy, paste ,edit ,publish, inflate ,repeat.

Pasadena Phil's picture

Another day, another round of inventory mishegas. Coming again soon, another round of rig count mishegas. The end is nigh!

At the very core of the domestic oil story is stable and growing throughput at the midstream as the US quickly moves to energy independence. The bicoastal globalist Cassandras will eventually be drowned out by the voters in Flyoverland as America's industrial might recovers.

It's not about oil prices moving up and down so much as it is that prices will stay well below what most of the non-US parasitic economies need to retain their seat at the global negotiation table. The swamp is being drained of ragheads and their minions. Stable oil prices with a strong us will produce a stable world economy.

Markets discount the future, not useless charts built on bogus data by central planners and people who don't adjust their data (how do you even do that?) to aproximate what free markets would be telling us if allowed to do so? The best we can do is stick to the most fundamental of fundamentals and oil is about as fundamental as it gets.

Carpe Tutti Bastardi's picture

Even if everybody, including even those with a 2 digit IQ, finally

realize that it is a manipulated market with no correlation to actual

supply or demand, will curtail those that control the inventory reports

be coerced to report anything approaching the true stats.

Zepper's picture

FIXED! MARKET! BILLIONS OF BARRELS IN STORAGE PRICE STILL WAY TO HIGH! LIES AND DECIET THROUGH QE AND THE FED!

Sapere aude's picture

Pasadena & Zepper. You can have as much faith as figures on oil in storage in the U.S., as you can about the claims of the amount of real gold in Fort Knox!

It's paper ruling the markets, rigging the markets and surprised some don't see it at last!

The U.S. will never be oil independent or energy independent in the foreseeable future, or don't you even look at the oil import figures where the U.S. is importing more oil than it was, but now has to hide it by suggesting its then exported.

There is a major catastrophe awaiting, through oil shortages, dressed up at present as a glut, but where more and more thinking people who bother to research before they write, realise it.