WTI Extends Losses Below $20 After Record Surge In Crude Inventories

WTI crashed below $20 (tagging $19.20) overnight after API reported huge inventory builds and was not helped by comments from the International Energy Agency that a historic production cut deal won’t be enough to counter a record demand slump this year.

This appears to confirm a key gauge of the oil market’s health which is at its weakest in more than a decade as supplies build and futures contracts roll over. West Texas Intermediate crude for May delivery traded at more than $7 a barrel below its June contract on Tuesday, the deepest contango since 2009. The May contract is nearing expiration and exchange-traded funds, including the United States Oil Fund, have been selling front-month contracts and buying second-month futures.

Source: Bloomberg

Simply put, this is an indication of extreme oversupply.

“At least over the next month or so, before these cuts have an opportunity to kick in, we are going to be very stressed on inventories,” Bart Melek, head of commodity strategy at TD Securities, said by telephone.

And so all eyes are once again on the inventories for any positive signs...

API

  • Crude +13.143mm (+10.1mm exp)

  • Cushing +5.361mm

  • Gasoline +2.226mm (+7.1mm exp)

  • Distillates +5.64mm (+1.8mm exp)

DOE

  • Crude +19.25mm (+10.1mm exp)

  • Cushing +5.724mm

  • Gasoline +4.914mm (+7.1mm exp)

  • Distillates +6.28mm (+1.8mm exp)

Everything is significantly worse than expected with record breaking builds in crude and gasoline and at Cushing...

Source: Bloomberg

Total US Crude stocks are now at their highest since June 2017...

Source: Bloomberg

And Gasoline stocks are at record highs...

Source: Bloomberg

...as Gasoline demand collapsed to series lows...

Source: Bloomberg

US production continued to slide (with U.S. Refineries running at the lowest rates since 2008)...

Source: Bloomberg

WTI crashed back below $20 after ramping up before the DOE data...

“We may see further downward pressure on prices in coming days and weeks,” IEA Executive Director Fatih Birol said.