Wednesday, October 5, 2016

Oil: "WTI Tests $50 On Another Surprise Inventory Draw, Production Cut"

Where is the oil coming out of inventory going?
From ZeroHedge:
Following last night's surprisingly large draw from API (-7.6mm vs +1.5mm exp), DOE reported a smaller 2.976mm draw (but still a draw). Cushing saw a bigger than expected (and API) build but Gasoline stocks rose less than expected (and API). Crude production fell modestly week-over-week, but hoveres around 8.5mm b/d. Crude prices dropped, then ramped towards $50...

  • Crude -7.6mm (+1.5mm exp)
  • Cushing +400k (+100k exp)
  • Gasoline +2mm (+500k exp)
  • Distillates -1.3mm
  • Crude -2.976mm (+1.5mm exp)
  • Cushing +569k (+100k exp)
  • Gasoline +222k (+500k exp)
  • Distillates -1.915mm
This is the 5th weekly draw in a row for Crude... at a time seasonally when inventories build...

US Crude inventories dropped back below 500mm...

But still a long way to go...
  • * Crude 147.1 million barrels above the five-year average for Sept. 30
  • * Gasoline 15.7 million barrels also above
  • * Distillates 25.5 million barrels also above
And on a week in which OPEC claimed to have agreed to a deal to cap production at some point in the future, US production slipped 0.35% on the week but remains stuck at around 8.5mm b/d...

 WTI $49.75 up $1.06; Brent $51.84 up 97 cents.