WTI Slips As Inventories Draw But Production Hits New Cycle High

WTI has extended gains (on weaker dollar) from last night's 'bullish' API data in a deja-vu of last week, and DOE data (showing large draws in Crude and Gasoline) confirmed continued rebalancing. However, once again mimiccing last week's action, prices were not exuberant as another surge in production - to new cycle highs - stymied some of the excitiment.



  • Crude -8.133mm (-2.45mm exp) - biggest draw since Sept 2016

  • Cushing -2.028mm - biggest draw since Feb 2014

  • Gasoline -801k (-534k exp)

  • Distillates +2.079mm


  • Crude -7.564mm (-2.3mm exp) - biggest draw since Sept 16

  • Cushing-1.948mm - biggest draw since Feb 14

  • Gasoline -1.697mm (-682k exp)

  • Distillates +3.131mm (+728k exp)

The question heading into this week was whether last week's bigger than expected draw was a one-off, or the start of rebalancing. This week, we get some answers and it seems like the rebalancing is continuing...

The EIA posted a draw of -2.6 million barrels of crude from the SPR last week, the largest since 2011.  Unless they were exported, these barrels will end up in commercial inventories the EIA reports this week.

Cushing inventories are now at their lowest since Nov 2015...

Rig counts rose once again this week, and while EIA cut its 2018 production outlook, this week saw the effect of field maintenance in Alaska and Tropical Storm Cindy in the Gulf of Mexico fall away and production surged once again this week - to new cycle highs...


The market's reaction for now appears very deva-vu all over again...

As Bloomberg notes, these headline inventory moves are close enough to the numbers published yesterday by the API to continue to support the price rise we saw after that first data release. Much of the bullish reaction had already been seen after the API data, so the upside from the EIA numbers may be limited.

And it appears the same pattern is playing out again...

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