WTI Extends Losses Below $72 After Big Crude, Cushing Build

WTI is extending losses after DOE reported a bigger than expected crude (and Cushing) inventory build, after API reported the biggest crude build since Feb 2017 and OPEC cut its global demand estimates.

Of course, OPEC was careful to play down its demand downgrade:


"There is no cause for alarm," Barkindo said at the Oil and Money conference in London. OPEC and its allies "are ready and willing to continue to make sure that the market remains well supplied."

“We are now gradually but steadily seeing the brighter path ahead, [That's] despite some of the bumps, despite some of the occasional clouds that have gathered.”


As Bloomberg Intelligence Senior Energy Analyst Vince Piazza notes, a mix of U.S.-China trade tensions and elevated crude prices pose a near-term risk to the oil market. With WTI above $75 a barrel, we believe crude has moved too far, too fast. Saudi Arabia seems comfortable with Brent below the current $85. At current prices, we expect increased hedging by U.S. producers and an extension of robust output, fostering a negative feedback loop.

But, despite OPEC and the storm shut-ins, all eyes were on inventories (at least in the short term)

API



  • Crude +9.75mm (+2.5mm exp) - biggest build since Feb 2017




  • Cushing +2.3mm (+800k exp) - biggest build since March 2018




  • Gasoline +3.4mm - biggest build since June 2018




  • Distillates -3.5mm - biggest draw since May 2018




Keep in mind that the API reported a build of about 1 million barrels last week.  The EIA then came out and said there was a build of nearly 8 million. So part of this big number by the API could be a catch-up for last week.

DOE



  • Crude +5.987mm (+2.5mm exp)




  • Cushing +2.359mm (+800k exp)




  • Gasoline +951k




  • Distillates -2.666mm




After a massive reported crude build by API, traders were apprehensive ahead of the official DOE data - especially after last week's big crude draw - and DOE reported a big crude draw of 5.987mm barrels (less than API but still big). Additionally, as Bloomberg notes, we've swung from fears of tank bottoms at the Cushing storage hub to concerns about how quickly it'll grow...


< Prev 1 2 Next >

Sign Up

Get the InvestingChannel
Free e-Letter Today

Learn More

Independent market opinion, analysis and ideas - delivered every business day

Premium market opinions, analysis, and ideas - delivered every business day

Editor's Picks