WTI Tumbles After Massive Crude Build

Oil prices extended gains this morning, despite the across-the-board builds reported by API last night, following comments from the IEA cautioning that prices could rally next year amid a tightening market.

“Positioning is now much less distorted than it has been for a while, and hence, perhaps for the first time in six months, short-term risk-reward is now skewed toward higher prices,” Standard Chartered analysts including Emily Ashford wrote in a report.

Given the big builds reported by API, all eyes will be on the official data now (especially considering the massive SPR draw last week) as inventories have slipped.

API

• Crude +7.819mm (-3.913mm exp) – biggest build since 10/7

• Cushing +640k

• Gasoline +877k

• Distillates +3.9mm

DOE

• Crude +10.23mm  (-3.913mm exp) – biggest build since March 2021

• Cushing +426k

• Gasoline +4.496mm

• Distillates +1.364mm

API reported builds across the board last night (after 4 straight weeks of sizable draws) and official DOE data confirmed it with a massive 10.23mm barrel build in crude stocks. Additionally there were builds at Cushing and in products…

Source: Bloomberg

Total US Crude stocks (ex-SPR) rebounded from their lowest since March (and near the lowest since 2018), but given the collapse in the SPR, total inventories must be near record lows.

Source: Bloomberg

SPR released 4.7 million barrels (~675,000 b/d). That’s the largest weekly release since early October. It puts the SPR at just 382.3 million barrels, the lowest since January 1984…

Source: Bloomberg

Crude production dropped very modestly last week..

Source: Bloomberg

WTI was trading just above $76.50 ahead of the official data, having shrugged off the big API-reported builds, but plunged on the official data…

Crude is still on track for its first back-to-back quarterly decline since mid-2019 on concerns about the global economic outlook, with thin liquidity in the oil market exacerbating price swings.