When the machines saw that US crude production rose by the most since Jan 1st, prices plunged back below $51... but the machines didn't like that, and following last night's API-reported draw, DOE confirmed the 3rd weekly drop in inventories for overall crude and Cushing (the latter more than expected) which juiced oil prices back higher. However, DOE also showed considerably larger than expected builds in Gasoline and Distillates (biggest in 2 months).
API
- Crude -3.56mm (-3mm exp)
- Cushing -1.3mm (-900k exp)
- Gasoline +760k (-100k exp)
- Distillates +270k
DOE
- Crude -3.23mm (-3mm exp)
- Cushing -1.36mm (-900k exp)
- Gasoline +1.01mm (-100k exp)
- Distillates +1.75mm
Third weekly draw in a row for overall crude inventories and Cushing but Distillates and Gasoline surprised with large builds.
Sore more details: while commercial stocks did decline by 3.3MM barrels, this was less than last night's 3.6MM API drop. This was to be expected as May-July are traditionally a period of aggressive draws in the physical market.
However, it is noteworthy that total crude and product stocks rose +3.2 million bbl last week reversing the prior week -2.7 million bbl decline
Gasoline stocks rose by 1MM, well above the expected 2.0MM draw.
Also notable was the increase in distillate inventory, which rose 1.754MM, far above the -700K expected...
And also notable is that distillate demand for this week was only +0.004 mbpd higher than the lowest level in the past 12 years seen in 2009 at 3.572 mbpd
But most importantly, production rose for the first time in 18 weeks and by the most since Jan 1st:
Have shale companies balanced out already?
Don't look at the market for the answer where the reaction is pure chaos: