WTI Tumbles Below Bolton's Bottom After Mixed Inventory Data

Oil prices have erased the overnight gains sparked by API's bigger-than-expected crude and gasoline builds as ministers from OPEC+ are gathering in Abu Dhabi with deeper production cuts off the agenda for now.

"The market is expecting a gasoline draw as Dorian made its way up the East Coast affecting gasoline imports, while accelerating demand during the report period," according to Andy Lipow, president of Lipow Oil Associates

API

  • Crude -7.23mm (-2.8mm exp)

  • Cushing -1.4mm (-980k exp)

  • Gasoline -4.5mm (-800k exp)

  • Distillates +600k (+100k exp)

DOE

  • Crude -6.91mm (-2.8mm exp)

  • Cushing -798k (-980k exp)

  • Gasoline -682k (-800k exp)

  • Distillates +2.704mm (+100k exp)

For the third week in a row Crude, Cushing, and Gasoline saw inventories decline but distillates saw a significant build in the last week.

Source: Bloomberg

Bloomberg Intelligence's Energy Analyst Fernando Valle explains that another large drop in crude should be supportive of prices, although the disappointing refined products numbers may take some of the optimism away. Gasoline disappointed slightly as refiners continued to clear out summer grade. Distillate had a large build as refinery utilization ramped and exports fell.

Crude production was flat in the last week, holding near record highs as oil rig counts stumble lower...

Source: Bloomberg

Oil prices are testing the post-Bolton lows after OPEC+ appeared to take further production cuts off the table and while they kneejerked lower, then higher, WTI prices fell back to pre-API levels...

Finally, as Bloomberg Intelligence's Senior Energy Analyst Vince Piazza sums up, "there's a clear disconnect among oil fundamentals, benchmark prices and upstream equities, we believe, with market participants not having much faith in crude sustaining price momentum. Despite a significant reduction in crude inventories of 62.5 million barrels since June 14, WTI has rallied less than 10%, while upstream equities dropped more than 5% during a 3% recovery by the S&P 500 Index. Demand erosion is driving the near-term narrative as the U.S.-China trade war raises concerns about slowing global economies."