Crude oil feels 3.1 million barrel supply draw

The API data showed across the board declines in inventories (for the second week in a row) versus most projections calling for a mixed report...including my projections. The API reported a large draw in crude oil inventories of about 3.1 million barrels... with a modest decrease in imports and no change in refinery run rates. The API reported a modest draw in gasoline and a surprisingly large draw in distillate fuel as refinery utilization rates were unchanged versus an expectation for small decline.

The market was expecting a modest build in crude oil stocks and a modest draw in gasoline and distillate fuel inventories this week. The report is overall bullish but it has not resulted in any significant buying coming into the market since the data was released late yesterday afternoon. The market remains in the midst of another Europe led rally as discussed above with inventory data a secondary driver. The API reported a draw of about 3.1 million barrels of crude oil with a 0.6 million barrel build in Cushing and a draw of 0.7 million barrels in PADD 2 which is neutral for the Brent/WTI spread which is back on the defensive once again. The bulk of the draw was in PADD 3 or the Gulf region showing a decline of about 1.9 million barrels. On the week gasoline stocks decreased by about 1.6 million barrels while distillate fuel stocks drew by about 2.2 million barrels. The more widely watched EIA data will be released this morning after another bullish API report that the market has paid little if any attention to so far. Whether or not the market will react to anything that comes out of the EIA this morning will be dependent on what revolves around Europe today.

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