WTI rolled over (but RBOB rallied) this morning ahead of the EIA data which showed the biggest (surprise) crude draw since March but the biggest (surprise) build in distilates since Feb. US crude production rose once again to a new record high.
Bloomberg Intelligence’s Energy Analyst Fernando Valle noted that the summer driving season will provide its customary demand jolt for crude, yet a counterweight will be the unexpected might of production in the U.S. while price differentials are wider across regions. Exports offer a relief valve amid wide discounts, which should also instigate greater utilization on views of constructive crack spreads. Crude oil differentials blowing out to more than $9 a barrel and domestic production estimated above 10.7 million barrels a day set the tone.
U.S. crack spreads are on a high despite economic and political headwinds in Europe and Latin America threatening economic activity. Tight gasoline inventories and strong demand have pushed cover back down to the lowest since 2014, while supply disruptions, even if not as dramatic as last year’s hurricane season, could lead to a blowout in margins.
API
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Crude +1.001mm (+450k exp)
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Cushing -132k
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Gasoline -1.682mm
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Distillates +1.466mm – biggest build since Feb
DOE
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Crude -3.62mm (+450k exp) – biggest draw since March
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Cushing -556k
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Gasoline +534k
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Distillates +634k – biggest build since Feb
EIA data showed almost the exact opposite to API with a big crude draw and notable builds in products…
And it’s another record for crude production, rising 44,000 barrels per day to 10.77 million bpd. A 24,000 bpd rise in production from Alaska erased the declines from last week’s report. The Lower 48 also rose 20,000 bpd.
“You had the API showing a strong build in crude oil and nothing fantastic on the products,” says Olivier Jakob, managing director of consultant Petromatrix GmbH. “Going back above $80 is going to be difficult.”
WTI was weaker but RBOB rallied into the EIA print but both rallied after the unexpected crude draw…
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