WTI/RBOB Tumble After Biggest Increase In Total Inventories Since April 2015

WTI/RBOB extended their losses after API's surprise gasoline build headlines overnight, and DOE data was even worse with surprise builds in crude, gasoline, and the biggest distillates build in 5 months. Production in the Lower 48 fell for the first time in 17 weeks (but very marginally). The reaction in oil and gasoline prices was abrupt...

So far this week... Genscape reported a 750k draw at Cushing last week...

API reported

  • Crude -4.62mm (-3.25 exp) - 9th weekly draw in a row
  • Cushing -1.56mm (-593k exp) - biggest draw since Oct '16
  • Gasoline +4.08mm (-50k exp) - biggest build since Jan '17
  • Distillates +1.75mm

DOE reported

  • Crude +3.925mm (-3.25 exp) - biggest build in 3 months
  • Cushing -1.444mm (-450k exp) - biggest draw in 4 months
  • Gasoline +3.324mm (-50k exp) - biggest build in 2 months
  • Distillates +4.355mm (+650k exp) - biggest build in 5 months

After last week's biggest crude draw since 2016, expectations continued to point to more draws but API's overnight build in gasoline surprised many. High refining processing rates have eaten into the crude glut, but they risk moving it downstream into products, and DOE confirms that is now backing up the chain once again... with major builds in crude, gasoline, and distillates...

As Bloomberg notes, the U.S. refining industry is working extra hard this year, processing last week hit a record high of 17.51 million barrels a day, more than one million barrels a day above last year's level at this time. After hitting the highest level since 1995 in January, the U.S. has cut gasoline stockpiles 21 percent to 24.7 days.

However, 4-week average gasoline demand fell 23,000 barrels a day - not a big drop, but going in the wrong direction for the start of the summer driving season. More importantly, perhaps, the weekly number was down 505,000 barrels a day.

That crude stockbuild goes against all expectations. If you add in refined products and the SPR, total U.S. inventories were up by a massive 13.815 million barrels week on week. That's the biggest increase in total inventories since April 2015. Still absolutely no sign of rebalancing in the U.S.

Crude Production in the Lower 48 fell for the first time in 17 weeks after reaching its highest since August 2015. The last week saw production drop from 8.835m b/d to  8.815m b/d.

 

Ahead of the DOE report, reports hit that Libya's largest oilfield was said to be shutdown due to a workers' protest (there was no reaction), but the overnight tumble on the surprise gasoline build was evident. Then when the shocking DOE data hit, prices tumbled...