WTI traders shrugged off API's surprise crude build overnight, breaking back above $70 ahead of DoE data, and extending gains as crude and gasoline inventories drewdown and Cushing stocks dropped again.
Despite expectations for a draw, a crude build is more seasonally normal as we enter refinery maintenance season, yet we are still seeing high utilization rates, according to James Williams, president of energy researcher WTRG Economics.
Bloomberg Intelligence Senior Energy Analyst Vince Piazza warns that while oil inventories are expected to show a decline in the latest week, concerns about oversupply are mounting. Our immediate focus is weaker global demand growth in 2H, following a softer 2Q in Europe and Asia, along with fears of tepid growth in non-OECD economies next year because of currency depreciation and trade bickering. Global supply of more than 100.2 million a day adds a layer of worry.
Crude +1.25mm (-2.5mm exp)
Cushing -1.57mm (-800k exp)
Crude -2.06mm (-2.5mm exp, -1.77 WHIS)
Cushing -1.25mm (-800k exp)
Gasoline -1.72mm (+100k exp)
Distillates +839k (+1.5mm exp)
We're coming into a tricky time of year when refinery maintenance is starting, which should be bearish for crude inventories. At the same time, throughput has been high for weeks and it's hard to judge when the maintenance will translate into a build.
This is the 5th weekly drawdown in crude in a row... even as refinery runs slowed (-2.2 ppt vs est. -0.8 ppt)
On the supply side, US Crude production continues to hover near record highs...
On the demand side, the rolling 4-week average for gasoline demand hit a seasonal record high in data going back to 1990 last week.
After dropping to near $69 after API's crude build print, WTI surged overnight above $70 ahead of DOE data, and extended gains after the drawdown...