WTI/RBOB Tumble After Biggest US Inventory Build Since 2008

WTI/RBOB are trading lower - near two-month lows - after API reported  a big gasoline build overnight (but crude draw), as traders anticipate EIA's confirmation (or denial as in the case of last week). However, a big surprise crude build (and gasoline build) sent prices notably lower, along with production hitting a new record high.

Inventories:

API

  • Crude -2.03mm (-2.1mm exp)

  • Cushing -1.038mm (-500k exp)

  • Gasoline +3.759mm - biggest build since the first week of January

  • Distillates -871k

DOE

  • Crude +2.072mm (-2.1mm exp)

  • Cushing -955k (-500k exp)

  • Gasoline +4.603mm - biggest build since Dec 2017

  • Distillates +2.165mm - biggest build since Feb 1018

Once again API was completely wrong on crude's inventory data.

A big surprise crude build - along with major builds in gasoline and distillates - was a big shock for traders. However, this is the 3rd weekly decline in Cushing stocks.

Total petroleum supplies soared 15.8 million barrels last week, the biggest weekly gain since October 2008.

Crude exports were expected to remain high since the Brent/WTI spread is so wide... Bloomberg Intelligence Senior Energy Analyst Vince Piazza notes that crude oil differentials blowing out to more than $9 a barrel vs. Brent drive the near-term narrative as summer driving season kicks into gear. Strong domestic production estimated above 10.7 million barrels a day is balanced against a tighter oil complex with elevated exports and refining demand.

However, Exports fell sharply, possibly reflecting protests against high fuel prices in Latin America...

Production rose once again to a new record high...+31k b/d to 10.8mm b/d...

But, interestingly, Bloomberg notes that booming production in the Permian has outpaced pipeline capacity, causing the spread between WTI Midland and Houston to blowout beyond $20 a barrel last week. Gulf Coast refinery runs and exports coupled with the production number will determine if the discount for Midland crude to Houston continues to widen.

 

"The API [crude draw] number, if confirmed, should help prices,” says UBS Group AG analyst Giovanni Staunovo. “The market should stay in deficit” despite Venezuela President Nicolas Maduro’s comments his country stands ready to raise production should OPEC decide to do so, he said.

However, WTI/RBOB prices tumbled on a big surprise crude and gasoline build...

 

Comments

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lunaticfringe Wed, 06/06/2018 - 10:44 Permalink

They plundered the public just in time for Memorial Day. Winning. Meanwhile distillates had the biggest build in one thousand years. Distillates +2.165mm - biggest build since Feb 1018

pebblewriter Wed, 06/06/2018 - 11:02 Permalink

Come on, Tylers.  I thought for sure you guys would see through the irrelevant supply/demand data and see oil and gas price moves for what they are: an easy way to manipulate CPI.

It's pretty straightforward.  Interest rates are too high because inflation is too high.  Inflation is too high because oil and gas prices (among other things) are too high. 

TPTB can't crush medical, rent, or food costs.  But, they can sure as hell crush oil and gas prices -- especially since they (1) control the inventory reporting, (2) have a limitless supply of free trading capital with which to spoof oil futures, and (3) have a "special relationship" with Saudi Arabia.

The slide in oil & gas will be over when inflation and interest rates are deemed low enough - not a moment before.

http://pebblewriter.com/update-on-oil-gas-jun-4-2018/

hanekhw Wed, 06/06/2018 - 11:04 Permalink

In an industry where inventory suddenly appears or disappears as if storage tanks normally can just pop out of the ground or suddenly buried prices are often 'volatile'.

nsurf9 Wed, 06/06/2018 - 11:45 Permalink

You know how you can tell where they buried an API/EIA oil analyst?

 

Look for the cork-screw and empty can of oil that was used to squeeze their crooked asses in ground!

Sapere aude Wed, 06/06/2018 - 11:55 Permalink

If you import more oil inventory increases

Poor old shale operators queuing for food stamps soon, after they have taken all the money off stockholders, pension funds, banks, the Fed, with no prospect of them servicing the debt let alone pay it back

As for trusting either API or DOE....not much of a conflict of interest there with a track record that is......

Lie_Detector Wed, 06/06/2018 - 13:40 Permalink

Prices keep coming back up anyway. They do not care if the storage tanks are overflowing. They are trying to keep the stock markets up and oil companies need higher prices to see their share prices higher.