WTI Extends Gains After ‘Delayed’ DoE Data Show Cushing Stocks Near ‘Operational Low’ Limits

WTI Extends Gains After ‘Delayed’ DoE Data Show Cushing Stocks Near ‘Operational Low’ Limits

After “systems issues” ‘delayed’ last week’s inventory, supply, and demand data from the EIA, the admin will report this week’s data as well as last week’s combined following API reported a notable build the prior week and a surprise draw last week.

API (last week)

Crude +5.607mm

Cushing -390k

Gasoline +1.216mm – first build since March

Distillates -1.656mm

API (this week)

Crude -3.799mm

Cushing -650k

Gasoline +2.852mm

Distillates +2.613mm

So over the last two weeks, API reports (net) a small crude build, notable Cushing draw, large gasoline build and small distillates build.

Oil prices are notably higher again today following reports that Iran-deal-talks have failed and news that Libya has halted oil exports. Additionally, OPEC’s pre-meeting reportedly concluded with no discussion of oil policy, focusing instead on administrative affairs, including an update to the group’s manifesto of guiding principles known as its Long-Term Strategy.

Meanwhile, a deluge of ugly macro data provides some fodder for the oil bears (though it is being dominated by supply fears for now)…

“Recession fears are just that — fears,” said Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd. 

“In the meantime, oil fundamentals remain solid.”

So all eyes are back on the official inventory and demand data…

DOE (net of the two weeks)

Crude -2.762mm

Cushing -782k

Gasoline +2.645mm

Distillates +2.559mm

The official data shows a small crude draw (API showed a small crude build), Cushing a 6th weekly draw of the last 7 (confirming API’s net draw). On the product side both gasoline and distillates showed unexpectedly large inventory builds (also confirming API’s data)…

Source: Bloomberg

Cushing inventories are getting very close to operational-low-limits again…

Source: Bloomberg

Cushing storage tanks require a minimum level of oil to maintain normal operations, which traders estimate at ~20M barrels.

US Crude Production rose to its highest since April 2020…

Source: Bloomberg

WTI was hovering around $113.50 ahead of the EIA data and extended gains modestly after the data…

Finally, we note that the tight supply situation in oil (especially European) is revealing itself in the WTI-Brent spread, grew to $6.19, the widest in almost three months.

Source: Bloomberg

“European demand will remain robust, especially as natural gas supplies run out, while the North American demand for crude is weakening,” said Ed Moya, senior market analyst at Oanda.

This is not good news for President Biden as prices are rising…

Source: Bloomberg

And his ratings are hitting record lows.

Tyler Durden
Wed, 06/29/2022 – 10:37

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