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Crude Plunges After Surprising Builds Despite Gasoline Draw And Production Cut

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Following last night’s unexpected build in crude (and Cushing) inventories, DOE data confirmed the surprising build in Crude (+1.05mm – 3rd weekly rise) and Cushing’s 1.2mm build is the most in 3 months. Gasoline inventories drewdown less than API reported but Distillates saw an unexpected build. Crude is whipsawing around as the bullish gasoline draw (and production cut) battles with bearishly unexpected builds in Crude, Cushing, and Distillates.

API

Crude +2.09mm (-1.5mm exp) – biggest in 3 months Cushing +1.2mm (-1.3mm exp) – biggest in 3 months Gasoline -3.9mm (-1.3mm exp) Distillates -1.5mm

DOE

Crude +1.055mm (-1.5mm exp) Cushing +1.16mm (-1.3mm exp) – biggest in 3 months Gasoline -2.8mm (-1.3mm exp) Distillates +1.15mm

This is the 3rd weekly crude build in a row and Cushing’s biggest build in 3 months… but all eyes are on the Gasoline draw (even though it is less than the API print)



US Crude production fell for the second week after 3 weeks of rising…

“This morning was moved by the headlines about Saudi Arabia and since then we’ve bounced back trying to regain the $45 level on Brent, but not really making it,” says Petromatrix analyst Olivier Jakob, and the reaction in crude after the DOE data is mixed to higher…

But the machines appear to have run out of ammo…

Some of the key charts watched by market participants remains gasoline stocks, which fell modestly by 2.8 million to 235 million bbls, the second consecutive drawdown…

… however as last week, a question is how much of this is due to gasoline being currently in transit. As Bloomberg reported overnight, Overseas Long Beach was seen moving a 3rd products tanker to Jacksonville, Fla., from N.Y. Harbor after deviating from typical U.S. Gulf Coast-to-Fla. route, according to vessel-tracking data compiled by Bloomberg. Tanker loaded at Carteret, N.J., terminal operated by Kinder Morgan; showed deeper draft Aug. 9, suggesting that even more PADD1 gasoline is simply being shifted around.

Looked at differently, gasoline stocks were still some 20 million bbls compared to 2015, even though the surplus has shrunk modestly from 25.5 mm two weeks ago.

Keeping an eye on PADD 1, aka the East Coast, shows that stocks dropped just marginally by 0.4 million to 70.9mm bbl in the past week, remaining near all time highs.

Finally, east coast gasoline were still 11.7mm bbl, or 20%, higher than a year ago, and the surplus has yet to show any notable decline.

Finally, something notable: east coast imports surged by 200,000 b/d to 794,000 compared to the prior week. It appears the glut isnt going away any time soon. Indeed, as Reuters’ John Kemp notes, PADD 1 gasoline imports are running at one of the fastest rates this year.

Charts: Bloomberg, Reuters