Despite last night's API-reported surge in Cushing inventories, oil futures surged into this morning's DOE data on the heels of terrible durable goods data. However, a shocking build in overall crude levels (+1.67mm vs -2mm) breaking crude's record 9-week streak of draws, sent crude prices reeling. Cushing also saw a major build as did Gasoline and production rose for the 3rd week in a row.
API
- Crude -827k (-2mm exp)
- Cushing +1.4mm (+750k exp)
- Gasoline -420k
- Distillates +292k
DOE
- Crude +1.67mm (-2mm exp)
- Cushing +1.11mm (+750k exp)
- Gasoline +452k
- Distillates -780k
This week's crude build ends the 9-week drop in overall crude inventories in a row… the longest streak of declines in US history (since 1982 Bloomberg EIA data – 8 week streaks in June 2015, Jan 2008, Sept 2004, Sept 1998)
Crude production rose for the 3rd week in a row…
Most troubling, however, remains the unprecedented surge in gasoline stocks confirming that demand for the product is just not there. As the chart below shows, gasoline stocks rose 0.5 million bbls last week to 241Mm bbl and is now 11.8% higher than last year.
Shown another way, gasoline stocks are now 25.5 million bbls vs 2015.
And even worse, as we warned one month ago, the PADD1 situation is now unprecedented, with a record 72.5 million barrels stored on the east coast.
And after ramping this morning – despite API's data – Crude prices are crashing after the surprise build…
“The perception of the API data shows that the market is looking at the bearish news and ignoring the bullish ones,” says Carsten Fritsch, commodity analyst at Commerzbank.
Tracking last year's pump-and-dump of hope perfectly.
As demand is set to tumble…
Charts: Bloomberg
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