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WTI/RBOB Surge After Across-The-Board Inventory Draws

WTI/RBOB has surged since last night’s across-the-board bullish API report, and while DOE showed that US crude production rose to a new record high, it confirmed API’s draws across all components.

Bloomberg Intelligence Senior Energy Analyst Vince Piazza explains that, impelled by WTI discounts to Brent of greater than $5 a barrel, domestic refinery runs are expected to push higher.

Strength in crude exports, relative to last year, should persist even with recent sequential softness. While summer driving season presents a demand catalyst, U.S. crude production remains robust.

API

  • Crude -1.047mm (+650k exp)

  • Cushing -1.015mm (-650k exp)

  • Gasoline -2.473mm

  • Distillates -845k

DOE

  • Crude -1.071mm (+650k exp)

  • Cushing -1.115mm (-650k exp)

  • Gasoline -2.968mm

  • Distillates -3.107mm

DOE data confirmed the API across-the-board inventory drawdown.

 

Total petroleum stockpiles haven’t been this low since March 2015…

As rig counts continue to rise, so US crude production is accelerating, rising 15k b/d to yet another new record high…

Which remains the big impediment to OPEC achieving its goal…

“They are willingly over-tightening this market,” said Jan Stuart, an oil economist at consultant Cornerstone Macro LLC in New York. “It’s not self-defeating if what you are looking for is a little extra money. If the idea is to get a ton of money in the door now, then they’re probably doing the right thing.”

“Would they declare victory now and stop? No way,” said Mike Wittner, head of oil market research at Societe Generale SA. “They’re happy to see inventories continue to go down, to see prices of $70 or $80. In the end, it’s about revenues. The question is at what point do they become uncomfortable with higher prices?”

 

WTI/RBOB prices accelerated overnight on OPEC chatter after extremely bullish API data and spiked further on the DOE confirmation…

Of course, fundamentals aside, the ‘biggest’ driver of the surge in oil is simple – Dennis Gartman went short!

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