Oil bounced notably overnight after a surprisingly large crude build reported by API, but there was some selling in QTI/RBOB into today's DOE data, but that ended quickly as DOE reported major inventory draws across the board sending WTI spiking above $46. However, after last week's drop, US crude production (in the Lower 48) soared by its most in 6 months.
- Crude -5.8mm (-2.5mm exp)
- Cushing -1.4mm
- Gasoline -5.7mm
- Distillates +400k
- Crude -6.299mm (-2mm exp)
- Cushing -1.334mm (-700k exp)
- Gasoline -3.669mm (-1.8mm exp)
- Distillates -1.85mm (+500k exp)
Draws across the board...
... which as Bloomberg summarizes, "provided fodder for the rebalancing argument. Overall inventories fell the most since September, refinery rates are rising again. Overall implied demand increased to a record high. A good report for bullish traders."
Others agreed “Attention is likely to be focused not only on inventory trends, but also on gasoline demand in the run-up to the Fourth of July, as well as on U.S. oil production”: Commerzbank
Compared to historical data, 2017 inventories are still +9 million bbl above their 2016 level at this time of the year, and +157 million bbl over 10-yr average...
... and as Reuters notes, commercial stocks are up +23 million bbl since start of year compared with +43 million bbl in 2016 and 10-yr avg of +35 million bbl
Meanwhile, helping the inventory draw was the drop in oil imports to 7.7mm from 8.0mmb/d last week.
As one would expect from the biggest driving weekend of the year, Gasoline Demand rebounded.
US Crude production in the Lower 48 fell the prior week (the biggest weekly drop since August) and last week saw a decline in the US oil rig count... But crude production rebounded, as expected, as offshore platforms came back online following Tropical Storm Cindy passed. Output in the lower 48 up 105,000 barrels a day, offsetting a small drop in Alaska due to seasonal maintenance. This is the highest production since Aug 2015...
“If we see a pullback in production, that really may get the market going,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone.
Total inventories slid by 13.4 million barrels, the most since September, providing some ammunition for bullish investors.
WTI/RBOB bounced overnight after API but faded notably into the DOE print, but then spiked above $46 on the big draws as everyone, for now, ignores the production surge.