WTI/RBOB Soar After Huge Surprise Crude Draw (Despite Production Surge)

Despite Russia production-cut roll-back headlines, WTI/RBOB prices are unchanged from the huge, bearish surprise API-reported inventory surge. However, for the 2nd week in a row, DOE data was entirely opposite and showed a big crude and gasoline draw. Markets ignored the 100k b/d surge in production...

Bloomberg Intelligence Senior Energy Analyst Vince Piazza notes that a potential agreement by OPEC to increase oil output when it meets later in June is curtailing the crude rally from earlier this year, while prices in earshot of $80 a barrel weigh on demand and threaten economic growth.

Bloomberg reports that OPEC and its partners will meet next week and debate whether to restore output halted last year. Saudi Arabia and Russia have said it’s time to reverse the cuts and appear to have begun reviving supplies, but face opposition from Iran, Iraq and Venezuela.

“There is no need for a change in the level of production,” said Iran’s OPEC governor, Hossein Kazempour Ardebili, who serves as one of the country’s representatives to the group. “Any increase should be limited to the production allocation in the agreement, which is valid to the end of 2018.”

Oil’s recent rally to a three-year peak above $80 a barrel in London has prompted warnings that prices could hurt economic growth. Yet Kazempour insisted that OPEC will resist pressure to raise production.

“The Trump administration is trying to intervene in the affairs of a sovereign organization,” he said. Such attempts have failed in the past and “they will also fail” this time.

API

  • Crude +833k (-1.25mm exp)

  • Cushing -730k (-900k exp)

  • Gasoline +2.33mm

  • Distillates +2.1mm

DOE

  • Crude -4.143mm (-1.25mm exp) - biggest draw since March

  • Cushing -687k (-900k exp)

  • Gasoline -2.271mm (+1mm exp)

  • Distillates -2.101mm

After a very bearish API report, and an extremely bearish DOE report last week, DOE data surprised across the board with the biggest crude draw in 3 months and a surprise gasoline draw. This is the 4th weekly decline in Cushing stocks in a row...

As always, all eyes will be on US crude production and the supply side of the equation and it spiked by 100k b/d to 10.9mm b/d - a new record...

That would approach world leader Russia...except that Russia just was said to boost its output to more than 11 million in the first week of June.

On the demand side, both gasoline and diesel demand tumbled  in last  week's data, but rebounded notably this week.

Gasoline demand at a record is bullish for everyone in the supply chain, but especially for U.S. refiners with access to land-locked barrels in the Midwest.

Bloomberg Intelligence Energy Analyst Fernando Valle points out that rising refinery utilization is pushing U.S. product stockpiles higher, but gasoline margins look a lot more challenged than distillate. Coverage for distillate is at a five-year low as domestic and export demand grow with economic activity. Gasoline, on the other hand, is saddled with demand destruction caused by elevated crude prices.

Infrastructure bottlenecks have pushed WTI-Brent differentials to around $9 a barrel, with higher exports plus elevated refining demand lending support to sentiment.

And domestic bottlenecks...

 

WTI/RBOB prices were flat from API's bearish print but exploded higher after DOE's surprise draws...

 

Comments

LawsofPhysics Wed, 06/13/2018 - 10:43 Permalink

Well, in order to actually do and make real products, you must have possession of consumable calories and reduced hydrocarbons!

Guess what oil is motherfuckers?

Not sure?

Okay then, perhaps I can interest you in a financial "product"...

...LOL!

adr Wed, 06/13/2018 - 10:53 Permalink

Gasoline margins pressured? What the absolute fuck!!!!!!!

Refineries have never had margins so high. Gasoline is priced like oil is $110 a barrel and thanks to record US crude production, most of the oil being turned into gas at US refineries has been bought at a massive discount, in some cases $45 a barrel.

$3 gas with $70 oil is in no way pressuring margins. RBOB should be around $1.12 not $2.22.

I think margins were pressured when RBOB futures hit $.28 in early 2009. 

This report has more bullshit than a Texas stockyard.

Arnold adr Wed, 06/13/2018 - 11:01 Permalink

Consider our fuel export price, adr.
I have not looked at the numbers, but we are well on our way to European fuel price, including the taxation.

You are in competition with the driving Eurotrash for your gallon pump price.

https://www.reuters.com/article/us-oil-prices-kemp/u-s-refiners-turn-to…

http://money.cnn.com/2018/01/28/investing/oil-prices-exports-shale-boom…

https://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPM0F_EEX_…

In reply to by adr

BangDingOw adr Wed, 06/13/2018 - 11:37 Permalink

This chart clearly shows futures did not hit .29 in 2009 . not even close. When crude bottomed about $35 in winter, you would expect about $1.15 in rbob. It dipped below that for only a few weeks.

https://finviz.com/futures_charts.ashx?t=RB&p=m1

 

A barrel being 42 gallons, $63 crude is 1.50 a gallon . Summer gas has been about .65 to refine for the last 20 years. Your $1.15 makes no sense whatsoever. $2.15 is spot on .

 

In reply to by adr

kavabanga Wed, 06/13/2018 - 12:34 Permalink

Price has been in a correction since the start of June this month, and we are seeing a potential completion of the correction around 66.79 - 67.27 area. 

We are holding a bearish bias on crude oil and will be targeting around the 64.05 and 62.35 area. 

hola dos cola kavabanga Wed, 06/13/2018 - 14:52 Permalink

Behold:

https://timesofindia.indiatimes.com/business/india-business/india-china…

combining their shopping carts with a view to challenging Opec’s capability to play havoc with crude prices

forming an oil buyer’s club

an alliance between Indian and Chinese state-run oil companies for greater say in the market

“The timing is right. The boom in the US oil and gas production gives us another leverage against Opec,” an official said.

looked at investing - either jointly or separately - in expanding US oil and gas export infrastructure, which is restricting higher exports to Asia.

Another major issue was the ‘Asian Premium’ – or a higher price – charged by West Asian oil exporters for shipments to Asian buyers, as opposed to Europe, has been the pet peeve. The hardening oil prices have amplified the effect.

International Energy Agency sees India and China fuelling half of global demand growth in the next five years, with India driving incremental demand growth through the next two decades.

--------------------------------

The end of OPEC should be priority No.1. It's a kartel, and a warmongering one.

If the Orange one can fix this... that'd be worthy a Nobel Price (for Trumponomics)

 

In reply to by kavabanga