WTI/RBOB Extend Losses After Huge Crude Build

Tyler Durden's picture

WTI/RBOB prices tumbled today on demand outlook cuts (and late comments from Brazil and Russia with regard OPEC cuts) ahead of tonight's API report which is expected to show crude and gasoline draws. However, WTI/RBOB prices extended their losses as Crude  (biggest in 9 months) and Gasoline saw significant builds.

 

API

  • Crude+6.513mm  (-2.4mm exp) - biggest build in 9 months
  • Cushing -1.803mm - biggets draw in 4 months
  • Gasoline +2.399mm (-1.5mm exp) - biggest build in 3 months
  • Distillates -2.527

Last week's surprise Crude build appear to be a trend...

Following OPEC's forecast of huge oil demand, IEA poured cold water all over that and cut its demand outlook, then Brazil and Russia seem to back away from extending OPEC production cuts...

Petrobras CEO Pedro Parente says his first responsibility is to investors:

"I can’t play games with the size of the debt I have,” Parente says when asked if Brazil’s state-run producer would ever consider such an action.

 

"How would I defend that to my investors?”

 

Says Brazil’s government doesn’t have the power to impose production limits on companies operating in the country, including Petrobras.

 

“I have a huge debt to pay, I have to produce oil, I have to make money"

and Bloomberg reports, OPEC has yet to convince Russia that it’s necessary to reach an agreement to extend oil-output cuts at a Vienna meeting later this month, as officials and oil bosses in Moscow still haven’t decided how long the output deal should last. The world’s largest energy exporter still believes it’s too early to announce anything this month, two people with knowledge of matter said. Another issue is a duration of the extension, with options including an additional three months of cuts being considered.

All of which weighed on prices heading into the API data and they extended losses as the data hit...

“Global demand growth, with the extension of the production cut, were the two primary factors behind the significant increase we’ve seen, particularly in the last six months,” Gene McGillian, a market research manager at Tradition Energy, says. The dour growth forecast is “taking a little bit of the bloom off the rose”

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GUS100CORRINA's picture

WTI/RBOB Extend Losses After Huge Crude Build

My response: Did everyone see article on energy's contribution to GDP yesterday?

No energy growth, GDP will go to zero!!!! Let that sink in for a moment.

NoDebt's picture

"I have a huge debt to pay, I have to produce oil, I have to make money"

This is what happens in a liquidity trap.  Slam those rates down, flood the market with fiat and.... everything that should have been culled long ago gets to stay alive to over-produce.  And the cycle continues around and around.

 

Sorry_about_Dresden's picture

The petrodollar is the only thing supporting the USD. 

Without the churn of UST debt to facilitate oil transactions, the tide would go out and Feral Reserve would be naked.

I believe the debt on Feral Reserve's balance sheet is leveraged 10:1 by Primary Dealers, if oil price dips below $50/barrel, there isn't enough liquidity to facilitate Feral Reserve trading desk's buying the S&P mini futures market, and stock index plummets.

 

 

FreeShitter's picture

WTI should be sub 30

Ron_Mexico's picture

Oh please won't you post what all the other commodity prices "should" be, so I'll know how to invest?

Ink Pusher's picture

back date that to 2008 please 

 

Tugg McFancy's picture

"The dour growth forecast"

They were only under by 700kpd for 2017.

Ron_Mexico's picture

ZH is unbelievable. On the one hand we have stories telling us that we're 3 years from "Peak Shale" here in the US and that Saudi Arabia has hardly any oil left.  On the other hand, it would seem that we are awash in oil.

M O B's picture

Yes, ZH will type anything that people will read with few other considerations.

That said, oil was over-bought. Conjecture, or outright unknowables like AE reserves, matter less than that simple technical truth.

Here's hoping for WTI at $50 or below again!

Arnold's picture

If you refuse to make up your own mind, Ron_Mexico, others will do it for you.

Oracle of Kypseli's picture

What Tyler reports and what paying contributors report are two different things.

Contributors have something to sell you and/or something to sway you towards.  We all need to make our own assessments on the issues.

Just as insurance companies and some religions capitalize on human fear, companies who are short oil will print reports to that effect and oil producing countries will tell you that they are cutting production.   

2_legs_bahhhhhd's picture

If you are confused, it's because, that's the plan. To keep everyone baffled with bullshit, with the truth in plane site.

Bobbyrib's picture

So Wall St overbought oil with the House's money (the Federal Reserve)..big deal!

 

It's not like there is a lot of funny money to slush around..oh wait. Kevin, you can stop hitting Ctrl-P now.

adr's picture

So can gas prices go back to a sane level under $2 a gallon, where it should be with oil under $70.

When oil hit $75 on the way down I filled up in West Virginia for $1.75. Now with oil just above $50 regular is $2.69. 

Someone is making out huge and it ain't me. 

Sorry_about_Dresden's picture

Feral Reserve has financed consolidation in the refining space, probably under one family? Probably still have tankers parked in the gulf. 

Just look at the crude storage capacity, which has to be maxed out. 

I guess the hurricane season knocked out somerefining capacity? I suppose the refiners are just getting their wind back?