WTI Tumbles Despite Record Drop In Cushing Stocks

After WTI's roll from June to July, oil prices have continued their explosion higher, accelerating this morning after last night's surprise crude draw from API. This is the fifth day higher in a row, with July WTI topping $33.50 despite vaccine expectations falling and little to no positive economic headlines. The market is clearly hope-filled...

“Demand is now clearly on its way back from extremely low levels in April,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “The direction for oil is most likely still higher from here.”

However, as Bloomberg Intelligence Energy Analyst Fernando Valle, warns, while opening of different states and increased traffic point to recovery in gasoline demand; with Latin America’s economic situation worsening, exports will be subdued and contribute to a growing glut in refined products, particularly diesel.

Let's just hope that DOE's official data confirms API's exuberance-stroked draw...

API

  • Crude -4.8mm (+2.4mm exp) - biggest draw since 12/29

  • Cushing -5.0mm - a record draw

  • Gasoline -651k (-3.5mm exp)

  • Distillates +5.1mm (+3.2mm exp)

DOE

  • Crude -4.982mm (+2.4mm exp)

  • Cushing -5.587mm - a record weekly draw

  • Gasoline +2.83mm (-3.5mm exp)

  • Distillates +3.831mm (+3.2mm exp)

After 15 straight weeks of builds, the streak broke last week and this week saw crude draw even bigger (the most since 2019). Cushing saw its biggest draw on record as gasoline and distillate saw unexpected builds...

Source: Bloomberg

Cushing is pulling back away from maxing out...

Source: Bloomberg

With rig counts collapsing, US crude production continues to plunge...

Source: Bloomberg

WTI soared this morning to top $33.50 (July) and stalled after the DOE data...

“There’s a lot of optimism baked in here,” said Paul Horsnell, head of commodities research at Standard Chartered Bank. “The market has balanced by supply coming off faster than expected.”

However, reality is still a concern...

“People are still locked down and there are still a lot of people without jobs right now,” said Tariq Zahir commodity fund manager at New York-based Tyche Capital Advisors LLC.

“It’s really going to fall on the next two weeks of seeing if these states that have opened up, is there going to be an increase in cases.”