The API data was mixed and directionally a bit out of sync with most of the projections...including my projections. The API reported a large than expected build in crude oil inventories of about 2.7 million barrels as crude oil imports increased by about 619,000 barrels per day while refinery run rates declined marginally by 0.2%. The API reported a surprise build in gasoline stocks and a draw in distillate fuel inventories that was within the range of expectations.
The market was expecting a smaller build in crude oil stocks and a modest draw in gasoline and distillate fuel inventories this week. The report is overall neutral with a bias to the bearish side but it has not resulted in any significant action coming into the market since the data was released late yesterday afternoon. The market remains hostage to the outcome of the European summit as discussed above with inventory data a secondary driver. The API reported a build of about 2.7 million barrels of crude oil with a 1.0 million barrel build in Cushing and a draw of 1.4 million barrels in PADD 2 which is neutral to bearish for the Brent/WTI spread which is back on the defensive once again. The bulk of the build was in PADD 3 or the Gulf region showing an increase of about 4.8 million barrels. On the week gasoline stocks increased by about 0.2 million barrels while distillate fuel stocks drew by about 1.8 million barrels. The more widely watched EIA data will be released this morning after the market has paid little if any attention to the API data 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.
Hurricane Rina is currently moving across the warm waters east of Belize toward the Mexican Peninsula but away for the major oil producing regions of the Gulf of Mexico. The latest projections from the National Hurricane Center are suggesting that the storm will steer away from the Gulf producing regions of the US and Mexico and will not become a threat to oil and Nat Gas producing operations and as such it is still a watcher and not something that warrants any price defensive action at this stage of its life. The storm is expected to turn east over the weekend and head into the waterways between Cuba and South Florida on its way out into the Atlantic. There is also a wave in the south central Caribbean that now has only a 10% chance of strengthening over the next 48 hours. For now we remain in a watching pattern rather than action pattern.