WTI/RBOB Slide After Oil Production Surge Offsets Biggest Crude Draw Since Sept

Tyler Durden's picture

Following last night's mixed mesage from API (crude draw, gasoline build), WTI prices have gone nowhere as all eyes focus on DOE data this morning. Confirming API's trend, crude saw its biggest draw since Sept 2016 but Gasoline, Distillates, and Cushing (most since March) saw builds which upset the machines and sent prices lower. Crude production rose once again to its highest since July 2015.

 

API

  • Crude -9.2mm (-3.38mm exp) - biggest draw since Sept 2016
  • Cushing +1.7mm (+700k exp) - biggest build since March
  • Gasoline +301k (-450k exp) - second weekly build in a row
  • Distillates -2.1mm (-250k exp)

DOE

  • Crude -8.945mm (-3.38mm exp) - biggest draw since Sept 2016
  • Cushing +678k (+700k exp) - biggest build since March
  • Gasoline +22k (-450k exp)
  • Distillates +702k (-250k exp)

Last week's surprise build in gasoline (confirmed by API) and big draw in crude (also confirmed by API overnight) remains the big focus and DOE data confirmed it with the biggest crude draw since Sept 2016 but builds in products and at Cushing...

While the builds in produst were modest, they were nevertheless a surprise shift in trend from draws to builds...

Imports from Saudi Arabia jumped 47 percent to 813,000 barrels a day, but remain well under the 1-million barrel figure exceeded through much of the first two quarters of this year.

As Bloomberg's David Marino notes, the total stockpile draw of 7.32 million barrels brings inventories to the lowest since January 2016, but still more than 200 million barrels above November 2014, when the glut really started building up. A lot of work still to do, as OPEC well knows.

Some more details, courtesy of Reuters: total commercial stocks fell -8.9 million bbl to 466 million bbl in the week to Aug 11 (much faster than normal at this time of year).

Total stocks are now -25 million bbl below 2016 level but... +134 million bbl over 10-yr average.

Stocks are now down -13 million bbl since start of year compared with +40 million rise in 2016 and 10-yr avg of +25 million, as the rebalancing appears to be taking shape.

Meanwhile, refinery throughput unchanged last week's record 17.6 million b/d.

One number which the market was closely watching were gasoline stocks, which disappointed the bulls by rising fractionally by 22kb, and basically unchanged at 231 million bbl, despite an expectation of a 1mm decline.

As a result, gasoline stocks are now 2.3mm bbl below similar levels last year, but are 19 mm bbls above the 10 year average.

Finally, while domestic production increased again, so did imports, which accelerated by +364,000 b/d to 8.1 million b/d in the week to Aug 11

While rig count growth has stabilized, crude production continues to rise in the Lower 48 (though had dropped in Alaska for 3 straight weeks) but both saw a rise this week (total production up 79k) as Lower 48 production hit its highest since July 2015...

Bloomberg notes that U.S. oil production from major shale plays is set to hit another record at 6.15 million barrels a day next month, according to the EIA. It's not just the Permian that's growing, as the agency sees higher output across the board.

WTI Crude prices barely budged from last night's API print heading into the DOE data, spiked higher on the crude draw but slipped back lower on product builds and production surge...

Heading into the print, "the size of a potential draw in crude inventories is “going to be the most material” aspect of the report, Brad Hunnewell, senior equity analyst at Rockefeller & Co., says, adding that "investors also expect to see a rise in gasoline demand."

However, as Bloomberg Intelligence energy analyst Vince Piazza notes:

No change to our bearish view: long road to recovery still ahead. We still see mid $50-$60s as the threshold for acceleration of U.S output. Commentary from exploration and production company conference calls implies drilling efficiencies are aiding productivity.

 

Elevated refining utilization has helped deplete bloated inventories across the petroleum value chain during the key seasonal driving period, and exports have helped as well. However, the market is seeing the end to summer, with runs traditionally declining in early fall.

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AlexCharting's picture

Death of an industry.... grab your popcorn. 

GUS100CORRINA's picture

WTI/RBOB Slide After Oil Production Surge Offsets Biggest Crude Draw Since Sept

My response: Does enyone anywhere at anytime believe this ENERGY data anymore?

FIGURES LIE and LIARS can FIGURE

and

TRUTH IS TREASON IN AN EMPIRE OF LIES

NoWayJose's picture

The numbers are made up and released by guys betting on which direction oil goes. We constantly see stories of demand and production numbers flip up or down - probably timed to rollover days for the big oil ETFs.

Sky flyer's picture

Wake me when the got dam stock markets go down even 3% in one day. Even 2%. Enough with the stupid oil drops or gold spikes stories.

Five Star's picture

Us production has completely offset OPEC cuts. Combined US OPEC production is set for a record in 2017. There is no balancing going on

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

skunzie's picture

Oooh, ooooh, ooooh, was it a surprise slide as either draws or builds are nowadays?

NoWayJose's picture

One day it will be "oil up big on huge draw, despite gasoline build" - and the numbers will be exactly the same, the only difference is that Goldman will pushing the 'up' button instead of the 'down' button.

Sapere aude's picture

Fake news, fake production

 

Of course production is not up. Its physically impossible and the IEA and EIA know it.

To sustain production alone you have to have more wells drilled, even in conventional wells were decline rates may be 10% as opposed to 65% for shales!

So prey tell us how production is surging with rigs dropping, when even on the Permian, decline rates are 65% and saturation drilling brings down the output of all the other wells?

So on a field of 1000 wells, presumably all drilled on sweet spots, losing 65% in first year, and with saturation drilling bringing down the output of the other wells, the minimum requirement is 1000 x 1000bopd peak initial output so a total of 1,000,000bopd coming down to just 350,000,000bopd in the first year.

So physically the comments on production surging are scientifically IMPOSSIBLE.

Look at the Eagle Ford, the Marcellus, the Bakken....all fields that are rarely commented on because they were also subject to the same ridiculous hype and none of these fields reached anywhere near the crazy levels the IEA or the EIA suggested, and sometimes 800% LESS!!

 

 

 

 

Sapere aude's picture

Interestingly or not, depending on whether you want fake news provided by governments having a political agenda or real news that you have to seek out these days, independent sources suggest the U.S. is importing the highest amount of oil for years, up to 10,000,000bopd.

Shows US imports have risen since 2015.

No doubt the jokers will suggest its all being exported...which is complete crap.

The U.S. is engaging in what the Saudi's have done for years, complete fabrication of import/export figures and fabrication of production figures.

We know this to be the situation, because the physics simply does not stack up.

Likewise, we know sooner rather than later the U.S. will be forced to announce sale of oil from the SPR, to explain away why so much of it doesn't exist any more, having been pumped back through bidirectional pipelines to massage production.

It will be tendered for by the companies that enjoyed the 'extra' production from pumping it back, no oil will change, no oil stock will change, as its already been used...but it will at least then tally the figures, but be sold to you and the world that its been sold because you have so much of it.....FAKE NEWS AT ITS BEST