WTI/RBOB Jump After Major Inventory Draw Despite Biggest Production Surge In 6 Months

Tyler Durden's picture

Oil bounced notably overnight after a surprisingly large crude build reported by API, but there was some selling in QTI/RBOB into today's DOE data, but that ended quickly as DOE reported major inventory draws across the board sending WTI spiking above $46. However, after last week's drop, US crude production (in the Lower 48) soared by its most in 6 months.

API

  • Crude -5.8mm (-2.5mm exp)
  • Cushing -1.4mm
  • Gasoline -5.7mm
  • Distillates +400k

DOE

  • Crude -6.299mm (-2mm exp)
  • Cushing -1.334mm (-700k exp)
  • Gasoline -3.669mm (-1.8mm exp)
  • Distillates -1.85mm (+500k exp)

Draws across the board...

... which as Bloomberg summarizes, "provided fodder for the rebalancing argument. Overall inventories fell the most since September, refinery rates are rising again. Overall implied demand increased to a record high. A good report for bullish traders."

Others agreed “Attention is likely to be focused not only on inventory trends, but also on gasoline demand in the run-up to the Fourth of July, as well as on U.S. oil production”: Commerzbank

Compared to historical data, 2017 inventories are still +9 million bbl above their 2016 level at this time of the year, and +157 million bbl over 10-yr average...

... and as Reuters notes, commercial stocks are up +23 million bbl since start of year compared with +43 million bbl in 2016 and 10-yr avg of +35 million bbl

Meanwhile, helping the inventory draw was the drop in oil imports to 7.7mm from 8.0mmb/d last week.

As one would expect from the biggest driving weekend of the year, Gasoline Demand rebounded.

US Crude production in the Lower 48 fell the prior week (the biggest weekly drop since August) and last week saw a decline in the US oil rig count... But crude production rebounded, as expected, as offshore platforms came back online following Tropical Storm Cindy passed. Output in the lower 48 up 105,000 barrels a day, offsetting a small drop in Alaska due to seasonal maintenance. This is the highest production since Aug 2015...

“If we see a pullback in production, that really may get the market going,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone.

Total inventories slid by 13.4 million barrels, the most since September, providing some ammunition for bullish investors.

WTI/RBOB bounced overnight after API but faded notably into the DOE print, but then spiked above $46 on the big draws as everyone, for now, ignores the production surge.

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American Psycho's picture

These WTI headlines are polar opposites almost daily.  Tomorrow the price will dump due to excess supply, then it will rally on larger than expected draw.

LawsofPhysics's picture

Again, people really are fucking morons...

 

Talking about "prices" in the absence of a mechanism for true price discovery is a fool's errand.

 

"Full Faith and Credit"

Not Goldman Sachs's picture

Traders trading because they are traders.

buzzsaw99's picture

pathetic fake rally

lester1's picture

Most likely the Federal Reserve's PPT buying oil futures contracts to bid up the price, then dumping the oil back into the ocean.

 

Audit the Fed NOW !!!!

bidaskspread's picture

You don't need an audit, just look in April 2016. Crude revaluation for lines of credit determination was occuring first week.  Before the end of the week, there was an emergency meeting called between the Fed and the whitehouse. The day of that annoucement, wti took off northward and has been holding above 40 to 50 range. One would think after after 2 years of negative cash flows and then having lines of credit slashed over 20 percent in April 2016, there would be distressed selling in the market to shore up some books..... odd, there wasn't reflection of that in the futures market.

mo mule's picture

WTI price is set by what happens at cushing is stupid.  There is tons and tons of supply, just setting in storage and these arshats keep talking about cushing like it matters. What nonesense, insane dumb nuts.  Fools they are, one big lie after another.  The pump price should be under a one buck, then you would create demand.  Stupid fvks! 

order66's picture

Buy the first bottom wick in the morning on the 15 min chart in ES. Like clockwork. Every....Fucking....Day.

Free Money.

mily's picture

I wonder how many "inner circle" API/DOE ppl trade on this info, they must be freaking millionaires 

Pasadena Phil's picture

How can it be that our domestic consumption is up, exports are up even though production is up? Geez, math is so complicated! Maybe this is what Trump meant last week when he stated that the US is on its way to being "energy DOMINANT"?

If there is one area that is almost impossible to get the real story reported it's the oil story. No matter what the facts are (pick your own), everyone sticks to their personal politically-derived conclusions.