WTI Tumbles After Unexpected Crude Inventory Rise, Huge Product Builds

Oil prices remain lower overnight after API reported a surprise crude build (and products also built notably) but the constant hype of OPEC+, Aramco's launch, and a trade deal 'any minute' are still providing a bid...

“The post-OPEC bullish jolt is all but a distant memory,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. “Oil prices have struggled for traction this week as demand concerns returned to the fore. The cautionary mood is likely to prevail as investors await fresh cues on the trade front.”

The question is - will official data confirm API's bearish data.

API

  • Crude +1.41mm (-2.5mm exp)

  • Cushing -3.53mm (-2.3mm exp)

  • Gasoline +4.92mm (+2.5mm exp)

  • Distillates +3.24mm (+1.6mm exp)

DOE

  • Crude +822k (-2.5mm exp)

  • Cushing -3.393 (-2.3mm exp) - biggest draw since Feb 2018

  • Gasoline +5.405mm (+2.5mm exp) - biggest build since Jan 2019

  • Distillates +4.118mm (+1.6mm exp) - biggest build since July 2019

After the prior week's surprise crude draw, analysts expect further inventory drops in the last week (despite API's surprise build) but official data showed a 822k barrel build (smaller than API but still a build). This is the 11th weekly build of the last 13 weeks...

Source: Bloomberg

Crude production dipped very modestly last week but remains record highs, despite plunging rig counts...

Source: Bloomberg

Notably, despite inventories at their highest since July, oil closed at its highest since September...

Source: Bloomberg

WTI hovered around $59.10 ahead of the print and extended losses after the build...

Will WTI find support at $58?

Finally we note Bloomberg Intelligence Senior Energy Analyst Vince Piazza's comments that "we're not sure the revised deal among OPEC+ offers much clarity for oil markets, as a cut of an additional 500,000 barrels a day only formalizes the existing pace of production. Revisiting the arrangement in early 2020 is the next hurdle for the organization."