WTI Dumps’n’Pumps After Biggest Crude Build In 13 Months

Oil prices extended yesterday’s gains overnight (shrugging off the major crude draw reported by API as some suggest it was merely an SPR transfer) after China ‘promised’ timely RRR cuts to save its economy from its own lockdowns (not sure how that will actually affect real physical demand) and Russia-Ukraine rhetoric shows no signs of improving.

“The market does look more balanced, but we have to remember that oil demand continues to grow this year,” given the recovery from Covid-19, Toril Bosoni, head of the IEA’s oil market division said in a Bloomberg TV interview.

“With all the uncertainty on both the demand and the supply side, the SPR releases go some way to create comfort for the market.”

For now, the market’s focus is squarely on developments in Russian production, Chinese demand, and on any signs of demand destruction in US gasoline…

API

Crude +7.757mm (+300k exp) – biggest build since March 2021

Cushing +375k

Gasoline -5.053mm (-800k exp)

Distillates -4.961mm (-1.5mm exp)

DOE

Crude +9.382mm (+300k exp) – biggest build since March 2021

Cushing +450k

Gasoline -3.648mm (-800k exp)

Distillates -2.902mm (-1.5mm exp)

US Crude stocks surged a shocking 9.382mm barrels last week – even more than API reported

Source: Bloomberg

The headline build in crude stockpiles of nearly 9.4 million barrels was partly the result of another big draw from of almost 3.9 million barrels of crude from the Strategic Petroleum Reserve last week. Total nationwide crude inventories (including commercial stockpiles and oil held in the SPR) rose by 5.5 million barrels in the week to April 8. That’s still the biggest weekly increase in total crude stockpiles in more than a year.

Source: Bloomberg

Additionally, a big part of the build in crude stockpiles has come from a slump in exports, which fell week on week by just over 1.5 million barrels a day, dropping to 2.18 million barrels a day. That’s their lowest level in 13 weeks.

Cushing stocks are ‘off the lows’…

Source: Bloomberg

US implied gasoline demand rebounded back towards normal last week…

Source: Bloomberg

US crude production hovered at recovery highs…

Source: Bloomberg

WTI hovered around $102 (back above its 50DMA) and slumped on the big crude build…

That drop did not last long and was bid back above pre-DOE levels as some suggested the bid crude build was driven by a big transfer from the SPR

Finally, the irony of the fact that oil prices have soared 8-9% in the last two days as Biden unveils his latest plan to bring down gas prices at the pump is not lost on us…

Source: Bloomberg

Today’s rally in crude suggests the price of gas is unlikely to fall much further for now.