WTI Extends Losses After Massive Crude Inventory Build
Oil prices are extending yesterday's losses as a surge in crude inventories reported by API overnight, combined with a strong dollar weighed on sentiment.
But all eyes are on the official data this morning to see if it confirms the giant build from API...
API
Crude +10.507mm (+600k exp)
Cushing +1.954mm
Gasoline +846k (+1.6mm exp)
Distillates +1.782mm (-100k exp)
DOE
Crude +16.28mm (+600k exp)
Cushing +659k
Gasoline +2.316mm (+1.6mm exp)
Distillates -1.285mm (-100k exp)
And it did... If you thought the API print was big, the official crude inventory build was even bigger-er... at 16.28mm barrels! Gasoline stocks also rose (while distillates drewdown)...
Source: Bloomberg
Stocks at the Cushing hub continue to rise (7th straight week), now at their highest since June 2021...
Source: Bloomberg
Bear in mind, as Bloomberg's Valle reports, refinery utilization has yet to recover from outages due to bad weather in Texas and seasonal maintenance activity. Supply may be curtailed for the next few weeks as plants resume full activity. This may hurt gasoline margins as refiners empty winter components from tanks ahead of the spring switch.
Total US crude stocks are also at their highest since June 2021...
Source: Bloomberg
Additionally, gasoline demand remains lackluster as last week’s decline snuffed out a five-week streak of gains that kicked off the year, leaving it well below typical seasonal levels.
US Crude production was flat at 12.3mm b/d - its post-COVID highs...
Source: Bloomberg
WTI was trading around $78.50 ahead of the official print and tumbled on the big build...
Crude is stuck in a $10 band so far in 2023, caught between the risk of a recession hitting world governments and continued optimism surrounding Chinese demand. Smaller, macro-related fluctuations have moved prices up and down, but prices remain in the narrow band as the market remains fairly balanced until either a slow down or China’s reopening comes into full force.
