Unexpected Gasoline Inventory Build, Production Rise Spark Crude Chaos

Following last week's surprise Distillates build (and bounce in production) and API's overnight surprise Gasoline build, DOE data this morning was mixed confirming the 2.3mm draw in overall crude inventories (9th weekin a row) but surpringly large builds in both Cushing and Gasoline inventories (expectations were for draws). Oil prices were chaotic - running stops high and low - as algos noted crude production also rose (for the 2nd week in a row).

API

  • Crude -2.3mm (-2mm exp)
  • Cushing -84k (-100k exp)
  • Gasoline +805k (-500k exp)
  • Distillates -484k

DOE

  • Crude  -2.3mm (-2mm exp)
  • Cushing +189k (-100k exp)
  • Gasoline  +911k (-500k exp)
  • Distillates -214k

This is the 9th straight week of crude inventory drawdowns...

 

 

Gasoline stocks, the biggest wildcard of the summer season are refiners are forced to shut runs, rose 0.9 million to 241 million.

Gasoline stocks are now 25 million higher than at the same time last year, and the Y/Y surplus continues to grow.

Following last week's bounce (as Alaska came back on line), crude production rose for the 2nd week in a row.

 

Crude was extending losses early on USD strength - AUG16 dropping below $44 for the first time in 2 months - but was panic bid into the DOE data... then went into full stop-running panic-mode (just as it did after API) following the print...

“The overall sentiment is going more hand-in-hand with the eurodollar move at the moment,” said Gerrit Zambo, trader at BayernLB

Charts: Bloomberg, Reuters