WTI/RBOB Slide On Surprise Build As US Crude Production Hits New Record High

Tyler Durden's picture

WTI/RBOB extended yesterday's IEA-driven losses after a big crude build reported overnight by API, and DOE did nothing to assuage that with a 1.85mm crude build (admittedly smaller than API's projected 6.5mm, but notably different from the 2.4mm draw expected), Gasoline also surprised with a build and WTI/RBOB extended losses. Additionally US Crude production rose to a new record high.

Bloomberg Intelligence energy analyst Fernando Valle notes:

Weaker demand drove a negative print for crude and product stocks. Strong refinery runs and rising crude exports were not enough to offset rising U.S. crude production. This latest increase, combined with reduced demand for refined products should put a damper on the oil-price recovery.

API

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

DOE

  • Crude +1.854mm (-2.4mm exp)
  • Cushing -1.504mm
  • Gasoline +894k (-1.5mm exp)
  • Distillates -799k

DOE data confirmed API's reported builds in crude and gasoline (and a big drawdown in Cushing stocks)

US Crude production reached a new record high the previous week - not what OPEC hoped for - and last week's big surge in the rig count suggests this is not about to slowdown as iot rose 25k b/d to a new record high...

 

WTI was hovering right at $55 heading into the DOE data and broiefly broke below on the print. RBOB is notably weaker...

“All of a sudden it seems that positives are in short supply for market bulls,” PVM Oil Associates analyst Stephen Brennock wrote in emailed report. “Yesterday’s slide is being compounded this morning by a fresh dose of price angst” sparked by the API report

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Ghost of PartysOver's picture

Shocker!  Price goes up and more shale comes on line.

NoWayJose's picture

Agree 100%. WTI up 15% in two months - what a shock that we produce more.

Equal shock - a Cushing draw? Gee, maybe someone who put $45 oil into Cushing two months ago wants to use that instead of buying spot price oil at $55??

And of course, with oil down we must crush oil services stocks - yet this defies the logic - if shale producers are increasing production they are using more oil services! And who wants to bet that OPEC is not ramping up production too!

Dukes's picture

Can I please write next weeks headline?
Here goes:

WTI/RBOB Ramp On Surprise Draw Down But US Production At 24 Month Highs

Tugg McFancy's picture

You realise these numbers are guestimates right? And that they've been 250-300k higher than the monthly numbers come in for a while now. There aren't any records here the EIA just won't revise despite their glaring error.

GlassHouse101's picture

Muhammad bin - derka derka will not be happy about this  . . Petro-Yuan.

LawsofPhysics's picture

...sure, sure.  Yes, I've always liked the transparency of doing business with those communist states...

/s

 

LawsofPhysics's picture

LOL! Arguing of the "price" of anything in the absence of a mechanism for TRUE PRICE DISCOVERY is a fool's errand.

"Full Faith and Credit"

NoWayJose's picture

It is inevitable - and there is no way to protect oil fields and processing facilities from getting hit hard!

Juggernaut x2's picture

see: Ploesti Oil Field Raids 

Hubbs's picture

Shale oil in aggregate is reportedly not profitable, not at $70 per barrel, and certainly not at $50. Banks and various "investors" are still blindly subsidizing these drillers, probably securitizing these dead-end loans and selling them off to pensions and other dead end balance sheets, but bottom line, capital is being diverted to keep these zombie drillers alive. I guess we still get oil on a thermodynamical energy returned on energy invested  (EROEI) basis of 1 barrel expended to get 4-5 barrels of oil, unlike the good old days of 1 to 50.  Yet another example of insidious malinvestment which detracts from investing money better elsewhere, although I quickly add, energy is the ultimate priority for all investments because, without it, the whole economy grinds to a halt.

 

In other words, investment will continue to be diverted to pay for oil until the EROEI return ratio drops to 1:1.

Juggernaut x2's picture

I don't see the Fed allowing oil to drop below $40 as a  backstop to banks heavily invested in shale companies.

Cloud9.5's picture

We can continue to produce oil even when the net energy gain goes negative as long the credit lines remain open.  How much energy does it take to create another trillion dollars in credit?  Very little I suspect.  We have been running this scam since 1913.  It has financed every war.  It has funded the exponential growth of government.  It sustains millions on entitlement programs.   There is no reason to assume that the same mechanism will not be used to continue to fund oil production.  Without oil, the entire system shuts down.

 

There is a dynamic that is set in motion when the central planners opt for exponential credit creation.  We have all seen it play out in smaller systems.  Inevitably the currency is destroyed.  We all know it is going to happen.  We just assume it is not going happen today.  That single assumption keeps the system going one more day.

myorouter's picture

All I know is that SHEPWAVE has been nailing these market moves.  Can't figure out how they seem to know everytime the markets will gap open way before futures show it.  

kavabanga's picture

Wti Oil should continue its bull run higher after a short correction. Saudi's seem to be finally getting their act together, and with power consolidation, should be able to limit supply enough to continue this rebound in prices this year. Fed's higher interest rates should dampen the response from debt-laden shale producers. These should set up for long-term higher oil.

jimmy12345's picture

The rise of the EV will kill oil prices.  Crude oil will be at $20 a barrel in 5 years.

Arnold's picture

Let's look at the current EROI per unit for the Model 3 shall we?