WTI Extends Losses After Massive Product Inventory Builds, Large SPR Add

Oil prices are sliding back again this morning, after surging yesterday to erase Tuesday’s losses, following a bigger than expected crude draw reported by API (but notably large product inventory builds).

Broad ‘risk-off’ sentiment in markets to start the year (and dollar strength) appear to be dulling any impact from possible supply disruptions in Libya for now.

API

• Crude -7.42mm (-3.00mm exp)

• Cushing +765k

• Gasoline +6.91mm

• Distillates +6.69mm

DOE

• Crude -5.50mm (-3.00mm exp)

• Cushing +706k – 11th weekly build in a row

• Gasoline -10.9mm – largest build ever

• Distillates -10.9mm – largest build since Jan 2019

Crude inventories declined for the second week in a row (more than expected) but gasoline and distillate stocks exploded higher…

Source: Bloomberg

Bloomberg’s Alex Longley notes one key thing to remember with all this data is that it essentially covers the final week of the year. That’s a time when the figures can get wonky for all kinds of reasons – tax purposes if you’re holding barrels in Texas, swaths of the country celebrating the holiday period, etc. So it’s worth taking some of the more extreme numbers with a grain of salt.

The Biden administration added 1.055mm barrels to the SPR last week – the largest addition since June 2020…

Source: Bloomberg

Stockpiles at the crucial Cushing hub continued to rise, now at their highest since July 2023…

Source: Bloomberg

Gasoline and Distillates stocks are at their highest since Q1 2022…

Source: Bloomberg

US crude production decline by 100k b/d last week but continues to hover near record highs…

Source: Bloomberg

WTI was hovering just below $72.50 ahead of the official data and extended losses after…

Crude earlier rallied as much as 1.8% as protesters in Libya shut output from from yet another oil field. The disruptions at the Sharara and El-Feel fields may take more than 300,000 barrels a day off the market.

Traders also are monitoring the volatile situation in the Red Sea, with Houthi militants claiming to have attacked another merchant ship this week.