Just as we warned yesterday following the EIA inventory and production data release, the exuberance over the crude draw was misplaced (due to the surge in product builds and almost unprecedented refining activity along with continued resurgent oil production). Saudi imports continue to show no sign of the OPEC cuts and asone anylst noted "the market looks like it wants to turn lower, maybe it has run out patience waiting for OPEC"
As a reminder, U.S. crude inventories declined 3.6m bbl in EIA data Wednesday, but gasoline, distillate stockpiles grew by a combined 6m bbl, and U.S. production also grew for 10th week.
As Bloomberg reports, WTI, Brent deepen declines and erase Wednesday’s post-EIA rally as market’s focus switches to big builds in gasoline and distillate inventories, rather than the crude draw.
“The gasoline numbers took the edge off the headline,” in EIA data Wednesday, says Jasper Lawler, senior market analyst at London Capital Group. "In the last couple of days we’ve had two afternoon attempts to reverse the downtrend and both have heavily been sold into."
"The market looks like it wants to turn lower, maybe it has run out patience waiting for OPEC"
The result is clear...
In context, this is a major problem for OPEC hopers...
Energy ministers from Saudi Arabia, Venezuela plan to meet with their Russian counterpart to discuss extending supply cuts - we suspect it will be too little, too late, as we noted previously, OPEC has lost the confidence of its hedge-fund-reinforcing backstop.