WTI/RBOB Sink After Biggest Gasoline Build In 7 Months, Production Hits New Cycle High

Tyler Durden's picture

Last night's mixed bag from API has been dominated by 'war premium' in oil prices as WTI bounced off $49 ahead of the DOE report which confirmed that gasoline inventories surprisingly built (+3.42mm vs -1.5mm exp) - the biggest build since January - and Crude inventories drew (though less than API). Crude production in the Lower 48 rose to 9.048mm b/d - a new cycle high.

 

API

  • Crude -7.839mm (-2.2mm exp)
  • Cushing +319k
  • Gasoline +1.529mm (-1.5mm exp)
  • Distillates -157k

DOE

  • Crude -6.45mm (-2.2mm exp)
  • Cushing +569k
  • Gasoline +3.42mm (-1.5mm exp)
  • Distillates -1.73mm (-500k exp)

The surprise build in gasoline inventories reported by API (and large draw in crude) were confirmed by DOE but the gasoline build was dramatic...

 

Total stockpiles of crude and product inventory continue to trend down to the lowest levels since Jan 2016...but still remains extreme...

As Bloomberg notes, looking over a one-year time horizon there is a clear downward trend, with stockpiles falling by around 74 million barrels. More than half of that drop has come in the last five weeks, so things certainly look like they are moving in the right direction for rebalancing.

The stock draw may look impressive on a one-year horizon, but the scale of the problem really only becomes visible when you look back to before the 2014 shale surge. Even after the recent drop, overall stockpiles are still more than 200 million barrels, or 12 percent, above their pre-2014 level.

With the US oil rig count declining for 3 of the last 6 weeks, expectations for a slowing in crude production is building. Crude production in the Lower 48 rose once again to 9.048mm b/d - the highest sicne July 2015...

 

WTI prices hovered around $49.50 into the DOE print - up from post-API lows around $49...

And RBOB is back down too...

“People are anticipating declines in the inventory data today,” said Hans van Cleef, senior energy economist at ABN Amro. “The statement from OPEC was not that surprising, and now we’re looking again to the next meeting”

“We’re trading within very small ranges at the moment, perhaps the inventory data can give a fresh boost to prices”

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tmosley's picture

When they said "peak oil", I guess they were talking about the price.

NotApplicable's picture

Wait, didn't we learn recently that the crude draws were really just a shell game, moving oil from one place to another?

Richard Chesler's picture

Is Goldman still calling for $200+ oil?

 

NoWayJose's picture

I would be more worried if Goldman called for $30 oil!

oak's picture

summer driving season is getting to close. heating oil production is not ready but soon.

NoWayJose's picture

I cannot see the 'surprise' here. Draw more crude (yes), make more summer blend gasoline (yes), then you get ready to prep your refinery to winter blend gasoline and heating oil. What's the 'surprise' in that?

Royal F's picture

"Surprise" relative to analyst expectations.

StackShinyStuff's picture

We're all oil traders now

Edward Morbius's picture

Maybe if the donald unleashes the fire and fury of a Tweetstorm against Fat Boy Kim they will remove him and peace will come to Zimbabwe, uh I mean Korea. Then oil can fall to it's natural price of $25/barrel.

adr's picture

Of course there is a massive spike in gasoline inventory, the crude draw had to go somewhere and why not with the insanity of $1.60 RBOB with sub $50 oil. 

Margins on gasoline have never been higher. A company that owns drilling and refining operations could lose money selling a barrel of oil elsewhere and make it up on gasoline profits. 

NoWayJose's picture

The latest crude oil 'crash' this week raised my pump price 11 cents from last week.

Five Star's picture

The OPEC cuts have been completely offset by US production. Combined US OPEC production is on pace for a record in 2017

http://thesoundingline.com/combined-us-opec-oil-production-pace-set-new-...

gregga777's picture

Actions have consequences though the American Intellectual Yet Idiot classes ruling MORONS are totally clueless about that fact of life. The American political parasites and Crony Capitalist CONporations sent 10's of thousands of factories and 10's of millions of good-paying full-time jobs to their Commie buddies in the People's Republic of China. So, now we have 102 MILLION unemployed working aged Americans and they need gasoline for what exactly? Right, pretty much nothing. For example, I fill up my F-250's 26-gallon "peanut-sized" tank with diesel about once every 2 or 3 months.

A. Boaty's picture

Maybe try used cooking oil as an alternative. Filter first.

gregga777's picture

That's at least a $15,000 engine. I've seen the results of bad diesel fuel on someone else's F250 in Moses Lake WA. Required a new engine and complete fuel injection system. It is pretty cool how they lift the entire cab off the frame to access the engine.

xantippa's picture

I like it how all the posters on here always have all the answers. Yet the only ones who get anything right are the ones who parrot the trades of ShepWave.  Thank you.  Seems like they have been the only ones to get the market direction right before the changes come. 

lntr's picture

Shep has been making some really good short term calls. yesterdays reversal was critical and profitable.  i just wish he would come out with more intra day trades for us newbies. 

skunzie's picture

Was it a "SURPRISE" or "UNEXPECTED" build of gasoline?!

Last of the Middle Class's picture

surprise this week, unexpected next week

Les Grossman's picture

ZH gets it wrong (i.e. misrepresents the truth ) again :/  

Oil went up overnight.  It then corrected downward to support at HIGHER LOWS THAN YESTERDAY before EIA reporting time.   Then moved up after the report...  it cont'd moving up to close positive for the day.  oil is currently in a tight range with L-Term support at 46.28.  .... a Daily clsoe above 50.43 could take us to 51.7

Les Grossman's picture

prices refer to CLU17 contract, specifically