Wednesday, May 4, 2016

Oil Gives Back Gains After EIA Inventory Report

Following on last night's "API Crude Oil Inventories: Oil Rallies Despite 1.3mn Build":
After the discrepancy between the API and EIA inventory numbers last week (1.1 million-barrel draw vs. 2mmbbl build) it may be wise to study tomorrow's EIA report to see if last week was a one-off or if there is a structural measurement problem,...
Compared to today's EIA report the API again underestimated the amount of inventory.
Front futures $43.75 up a dime after trading $1.13 higher prior to the release.
From ZeroHedge:

Crude Slumps On Big Inventory Build Despite Biggest Production Plunge In 10 Months
Overnight exuberance sparked by lower than expected Cushing build reported by API is fading on the heels of June OPEC headlines of no production limits (and rising Saudi production) heading into DOE inventory data. Crude inventories printed a significantly higher than expected 2.78mm build but Cushing saw a smaller than expected build of 243k. Gaosline surprised with a 536k build (API 1.17m draw) and Distillates saw a smaller than API build of 1.26m barrels.

The biggest news was the biggest plunge in US production since July 2015, and yet inventories still rose suggesting that fundamentally this is and has been as much a demand story as one of supply (even as OPEC countries are happy to offset declining US output).
  • Crude +1.265m (+750k exp)
  • Cushing +382k (+1.3m exp.. Genscape +821k)
  • Gasoline -1.17m
  • Distillates -2.6m
  • Crude +2.78m (+750k exp)
  • Cushing +243k (+1.3m exp.. Genscape +821k)
  • Gasoline +536k
  • Distillates -1.26m
Overall inventory levels continue to rise...
Production plunged by the most sicne July 2015 (driven by a 16.2% collapse in Alaska production - Lower 48 fell 0.4% Wow)

On the all important topic of gasoline demand, which has been perhaps the biggest bullish driver in recent months, gasoline stocks rose 0.5MM to 241.8MM...MORE
Her is the Energy Information Administration's Weekly Petroleum Status Report.