Following last night's surprise build of 2.35mm barrels reported by API (against expectations of a 2.5mm draw), DOE reported inventory draws across the board. While the headline crude draw of 1.36mm barrels was below expectations of -2.5mm, it was considerably lower than API. Cushing saw a bigger than expected draw of 704k and both gasoline and distillates draws were bigger than expected. This is the seventh week in a row of Distillate draws. Crude production fell for the 19th week in a row to its lowest since Sept 2014.
API
- Crude +2.35mm (-2.5mm exp)
- Cushing -1.1mm (-500k exp)
- Gasoline -1.48mm
- Distillates -1.15mm
DOE
- Crude -1.36mm (-2.5mm exp - range from -6.42mm to 0)
- Cushing -704k (-500k exp)
- Gasoline -1.49mm (-350k exp)
- Distillates -1.25mm (1mm exp)
The 7th weekly distillate draw in a row and the entire complex saw inventory draws...
And production dropped for the 19th week in a row...
And crude spiked higher...
“Considering the rally we saw yesterday was related to hopes for a supply deal this is a bit of a slap in the face and we are seeing some weakness coming in,” says Saxo Bank head of commodity strategy Ole Hansen. “Comments from Draghi are also creating a bit of volatility in the euro/dollar that is also impacting oil prices”
“Oil has moved to the downside, but not broken any technical levels and is still in a tight range -- we are now waiting to see if the OPEC press conference or inventory data will change that”
“WTI focus is on $48, if we break below that we could see renewed weakness down to $45”
Charts: Bloomberg