WTI Algos Confused Despite Surprise Crude, Gasoline Builds

Yet another surprise crude build reported by API sent WTI lower overnight, and held below $72 ahead of DOE data (which was expected to show a build).

“Exports are up and I don’t think production is going anywhere - it’s going to be pretty locked-in at 11 million barrels a day,” which would likely lead to a crude draw, says Thomas Finlon, director of Energy Analytics Group.

Bloomberg Intelligence Senior Energy Analyst Vince Piazza notes that a generous dollop of bad news is good news for the crude market. U.S. sanctions on Iran, Venezuela's deteriorating economy and other potential geopolitical disruptions will limit supply. On the other hand, the trade spat between Washington and Beijing could slow economic growth and reduce demand, which joins robust domestic production and U.S. refinery maintenance season in providing ammunition for a more skeptical view on oil prices.

API

  • Crude +2.903mm (-1.5mm exp)

  • Cushing +260k (-150k exp)

  • Gasoline +949k

  • Distillates -944k

DOE

  • Crude +1.85mm (-1.5mm exp)

  • Cushing +461k (-150k exp)

  • Gasoline +1.53mm (+700k exp)

  • Distillates -2.24mm

However, confirming API, DOE reported a surprise 1.85mm barrel build (the first in six weeks) along with unexpectedly large inventory increases at Cushing and in Gasoline.

 

US Crude Production rose to a new record high...

 

WTI broke below $72 after API, and held below it heading into DOE, but the unexpected crude build sparked algo chaos as the machines just could not make their minds up...