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WTI/RBOB Bounce After Crude Draw Despite New Record Production

Summary:
WTI/RBOB prices traded lower since last night's API-reported surprise crude draw but a 1.404mm draw (and bid gasoline draw) reported by DOE prompted a buying knee-jerk in prices. Production continued to rise to a new record high. Ahead of the data, Bloomberg explained that the number to watch today will be gasoline exports, which can typically ...

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WTI/RBOB prices traded lower since last night's API-reported surprise crude draw but a 1.404mm draw (and bid gasoline draw) reported by DOE prompted a buying knee-jerk in prices. Production continued to rise to a new record high.

Ahead of the data, Bloomberg explained that the number to watch today will be gasoline exports, which can typically drift lower this time of year as more product goes to domestic customers in advance of the summer driving season. If growing U.S. production and high refinery runs churning out gasoline are met with clues that domestic demand isn't matching up to expectations, the crude price that has a lot of geopolitics baked in may falter still.

API

  • Crude +4.845mm (-1.75mm exp)

  • Cushing +62k (+550k exp)

  • Gasoline -3.369mm

  • Distillates -768k

DOE

  • Crude -1.404mm (-2.00mm exp.. BBG users +1.13mm exp)

  • Cushing +53k (+550k exp)

  • Gasoline -3.79mm

  • Distillates -92k

DOE reports a draw - smaller than expected, but dramatically different from API's surprise build. Gasoline stocks continued to slide but distillates draw seems to have stalled...

WTI/RBOB Bounce After Crude Draw Despite New Record Production

U.S. Fuel demand fell 1.12% in past four weeks, but gasoline exports jumped last week...

WTI/RBOB Bounce After Crude Draw Despite New Record Production

Dramatically different from the seasonal norms...

WTI/RBOB Bounce After Crude Draw Despite New Record Production

Crude production continues to surge - up 20k b/d to a new record high last week - but there have been signs out of the Permian basin that pipelines are full and rail shipments aren't making up the difference in getting barrels out of West Texas to markets.

WTI/RBOB Bounce After Crude Draw Despite New Record Production

Overnight gains from the kneejerk lower after API faded this morning ahead of DOE but bounced on the surprise crude draw...

WTI/RBOB Bounce After Crude Draw Despite New Record Production

 

However, as Bloomberg notes, despite oil’s surge to near $80 a barrel, some corners of the market that reflect the trading of actual barrels are weakening fast.

WTI/RBOB Bounce After Crude Draw Despite New Record Production

The nearest Brent time-spread weakened its backwardation to as little as 6 cents on Wednesday, compared with about 60 cents a month ago. That’s in part because for the coming months cheaper U.S. crude is set to flood across the Atlantic, while demand for Brent grades from traditional buyers in Asia has been muted, according to Citigroup Inc. analyst Chris Main.

Tyler Durden
Tyler Durden (a pseudonym) represents the idea that a return to truly efficient markets is a possibility and a necessity. After having experienced the inner workings of capitalism at various asset managers and advisors, Tyler believes that the current model is flawed and a deleveraging at every level of modern society is needed to reinspire the fundamental entrepreneurial spirit. Visit his blog: ZeroHedge (http://www.zerohedge.com/)

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