Wednesday, June 8, 2016

"Crude Chaos After Inventories Drop But Production Rises...

Front Futures $51.04 up 68 cents after trading up. Then down. Then up. Then down.
Here's the 5 minute chart from FinViz:

And from ZeroHedge:
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).
  • Crude -3.56mm (-3mm exp)
  • Cushing -1.3mm (-900k exp)
  • Gasoline +760k (-100k exp)
  • Distillates +270k
  • 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...MORE