With the seasonally drawdown-prone December completed, we begin seasonally build-prone January with expectations for a 2mm barrel build. However, according to API, both total and Cushing inventory levels tumbled (-3.9mm and 300k respectively). Great news - so why is crude tumbling? Simple - massive builds in end-products again with Gasoline up a massive 7mm barrels and Distillates up 3.6mm barrels. Having ramped off sub-$30 levels aftwr NYMEX closed, and lifted by the Iran-US news, WTI is sliding back rapidly.
The largest 2-week Gasoline invenrtiory build ever...
[6]
And so while algos saw the inventrory draw headlines, real traders know what record-breaking builds in end-product means...
[7]
December saw a very flat inventory overall (despite being a seasonally extreme period for drawdowns into year-end tax planning)...
[8]
Judging from history, as Bloomberg notes [9], it should resume as soon as the festive season is over: Stocks have built by 3.2 million barrels on average in January since 1921.
