WTI Slides After Small Crude Inventory Draw, Distillates Surprising Build

WTI Slides After Small Crude Inventory Draw, Distillates Surprising Build

Oil prices have erased much of yesterday’s gains after headlines reported the U.S. called on the OPEC+ alliance to revive production more quickly, as it appears the Biden White House is starting to panic over the highest gas prices in seven years…

U.S. retail gasoline prices are running at about $3.18 a gallon at the pumps, up more than a dollar from last year at this time, according to the American Automobile Association.

Which is ironic given that the call for OPEC+ to boost production also seems a quick turnabout from Thursday’s executive order calling for hybrid and electric cars to make up 50% of U.S. auto sales by 2023.

The White House on Wednesday also directed the Federal Trade Commission (FTC), which polices anti-competitive behavior in domestic U.S. markets, to investigate whether illegal practices were contributing to higher U.S. gasoline prices.

“During this summer driving season, there have been divergences between oil prices and the cost of gasoline at the pump,” Biden’s top economic aide, Brian Deese, wrote in a letter to FTC chair Lina Khan.

He encouraged the FTC to “consider using all of its available tools to monitor the U.S. gasoline market and address any illegal conduct.”

Additionally, some Asian buyers are taking less Saudi crude as delta spreads.

For now, all eyes on inventories and demand to see if Delta is having an impact (as Southwest Airlines CEO says it is).

API

Crude -816k (-600k exp)

Cushing -413k

Gasoline -1.114mm (-2.4mm exp)

Distillates +673k (-600k exp)

DOE

Crude -448k (-600k exp, Whisper +1.27mm!)

Cushing -325k

Gasoline -1.401mm (-2.4mm exp)

Distillates +1.767mm (-600k exp)

After last week’s unexpected build, analysts expected a return to crude builds (and API affirmed that expectation last night, albeit small), although BBG users ‘whsipered’ of a 1.27mm barrel build. Crude did manage a draw however, of only 448k barrels while Distillates saw a notable build of 1.767mm barrels which may be a warning signal for demand…

Source: Bloomberg

US crude production remains controlled for now even as rig counts and prices rise. Will Biden’s new comments spark more drill-baby-drilling…

Source: Bloomberg

WTI has swing around wildly in the last two days and hovered around $67.75 ahead of the EIA official data (well below the levels at last night’s API data).

Even with Biden’s OPEC+ demands today, many analysts expect global markets will soon tighten as demand begins to pick up again. OPEC’s own data show its planned monthly hikes will fill only a fraction of the supply deficit over the rest of this year.

“We believe that market tightening is far from over and that prices over the coming months will rebound,” said Ed Morse, head of commodities research at Citigroup Inc.

Tyler Durden
Wed, 08/11/2021 – 10:35

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