WTF WTI? Oil Spikes After Biggest Gasoline Inventory Build In 6 Months

Update (1040ET): Bwuahahaha… WTI reversed its loss on the big gasoline build and is now screaming higher…

One possible reason is, as Bloomberg reports, total crude stockpiles, including both commercial inventories and crude in the Strategic Petroleum Reserve, fell by 7.25 million barrels in the week to Dec. 17.

The withdrawal of 2.5 million barrels from the SPR came on top of a 4.7 million barrel drop in commercial stockpiles. That’s the biggest drop in total crude stockpiles since July.

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Oil prices continued their exuberant ‘Omicron Schmomicron’ rebound overnight with WTI back above $71.50 ahead of this morning’s official inventory and production data. Amid utter carnage in the European power markets, US energy markets remain relatively calm.

“Data remains supportive, with supply outages, elevated flight activity and congestion on roads resulting in still falling inventories,” said Giovanni Staunovo, commodity analyst at UBS Group AG.

“Concern on new mobility restrictions impacting oil demand as a result of the omicron variant is keeping prices in check, however.”

DOE

Crude -4.715mm (-3.15mm exp, API -3.67mm)

Cushing +1.463mm

Gasoline +5.533mm – biggest build since June

Distillates +396k

After a big draw last week, analysts expected another sizable drop in US crude stocks and they were right as crude inventory drew down 4.7mm barrels (more than the 3.15mm expected). Cushing stocks rose for the 6th straight week. Most notably, Gasoline stocks surged higher last week by 5.5mm barrels – the biggest weekly build since June…

Source: Bloomberg

US crude production dipped last week…

Source: Bloomberg

WTI hovered around $71.50 ahead of the DOE print, and slipped after the big gasoline stock build…

Trading is starting to wane into the Christmas period. Average Brent crude futures volumes over the last 15 days are the least in two months, while WTI open interest has plunged to its lowest since 2016.

Finally, we wonder when the demand for a shift away from NatGas (EU gas is trading an oil barrel equivalent price over $350) in European power producers will spur a pull in crude demand…

That is quite a differential.