Crude Tumbles To $40 Handle After DOE Confirms Significant Cushing Inventory Build

Following last night's API-reported surprise inventory draw (but major Cushing build) [3], DOE reports a modest (as expected) inventory build (of 252k barrels) - the 8th week in a row. Most crucially, given rising fears of the fullness of land storage capabilities [4], is DOE confirmed a significant 1.495mm barrel inventory build at Cushing. Total crude produiction fell a tiny amount (after 3 weeks of rising). WTI Crude oscillated a little before timbling back to a $40 handle once again - erasing the API kneejerk gains.

Another major inventory build at Cushing...

[5]

And WTI erases the algo gains overnight...

As we noted earlier, [4]

In short: "The US is the last place with significant onshore crude storage space left."

 

Which leads directly to Citi's conclusion: "'Sell the rally' near-term as fundamentals remain very sloppy and inventory constraints are becoming increasingly more binding."

Charts: Bloomberg