Oil Jumps On Surprise Crude Draw Despite Surge In Production

After API's surprising large gasoline, crude build overnight, prices have been under pressure (not helped by OPEC comments).However, DOE just reported a much bigger than expected draw in crude (complete opposite of API). Cushing saw a bigger than expected build and crude production surged. This is the 3rd biggest weekly surge in production since the peak in May 2015. Gasoline demand continues to slide.
 

API

  • Crude +4.68mm (-1.5mm exp)
  • Cushing +632k (+3.2mm exp)
  • Gasoline +3.905mm - biggest since Jan
  • Distillates +233k

DOE

  • Crude  -2.56mm (-1.5mm exp)
  • Cushing  +1.223mm (+1.0mm exp)
  • Gasoline +497k (+2.0mm exp)
  • Distillates -762k (+1.0mm exp)

4th weekly crude draw in a row but Cushing continues to see big builds...

 

According to the latest inventory data, the US now has some 483 million barrels in commercial stocks, 5.3%, or 25MM bbl above the last year's level:

 

That said, as Reuters notes, stocks are now falling a more slowly than normal for this time of year but faster than in 2015

 

As Bloomberg notes, much of the draw came from PADD5 as Cushing built.

 

Pushing Cushing Inventories to 7-month highs.

 

And notably gasoline demand is tumbling.

 

Still, despite the 0.5mm increase in gasoline stocks to 230mm in the past week, the increase was smaller than is customary for this time of the year, which means total gasoline stocks are now just 10.7mm bbl, or 4.9%, higher than where they were one year ago.

Meanwhile US imports slowed modestly to 7.4mmbpd, compared to 8.3mmbpd last week.

 

With rising rig counts, it is likely the trend of US Crude production increases will continue, and they did this week with a big surge post-OPEC: This is the 3rd biggest weekly surge in production since the peak in May 2015.
 

 

Oil prices have retraced to API levels from last night...