WTI Extends Losses After Massive Product Inventory Build, New Record Production

Oil prices are extending losses after last night's surprise crude build reported by API, with WTI trading below $58 following OPEC’s latest forecasts suggesting a weaker outlook for global oil markets this year as surging supplies from competitors from Norway to Guyana threaten the group’s efforts to defend crude prices.

API

  • Crude +1.1mm (-1.1mm exp)

  • Cushing -69k (-1.0mm exp)

  • Gasoline +3.2mm  (+3.4mm exp)

  • Distillates +6.78mm (+1.1mm exp)

DOE

  • Crude -2.55mm (-1.1mm exp)

  • Cushing +342k (-1.0mm exp)

  • Gasoline +6.678mm (+3.4mm exp)

  • Distillates +8.171mm (+1.1mm exp)

The prior week was dominated by a surprise crude build and huge product inventory builds. This week saw crude inventories drop modestly (-2.55mm) but gasoline and distillates inventories soar (and the first Cushing build in 9 weeks)

Source: Bloomberg

US Crude production pushed higher, hitting 13mm b/d for the first time...

Source: Bloomberg

WTI traded sub-$58 ahead of the API print, and dropped notably after the huge buiulds in products

WTI trading $57.50 is the lowest in 5 weeks...

Bloomberg Intelligence Energy Analyst Fernando Valle notes, "the crude drop should be largely ignored, considering the magnitude of the increase in refined-product inventories. The nearly 15 million-barrel increase across gasoline and diesel should be a major headwind for U.S. refining margins that are significantly above international markets. Exports were unusually weak and may ease some of the oversupply in the coming weeks, but the increase will likely lead to further refining run cuts. Gasoline looks particularly challenged at 5-year highs in days of cover.”