Following API's reported build in gasoline (and distillates), oil prices have chopped around amid Saudi headlines and OPEC jawboning, as all eyes are focused on gasoline inventories in the DOE report. An unexpedted draw in Gasoline (and Crude draw) sent prices higher initially, but another surge in production capped some of the gains and prices fell back.

 

API

  • Crude -2.72mm (-1.2mm exp)
  • Cushing -1.269mm
  • Gasoline +346k (+500k exp)
  • Distillates +1.837mm

DOE

  • Crude -2.45mm (-1.2mm exp)
  • Cushing (-579k exp)
  • Gasoline -578k (+500k exp)
  • Distillates +1.08mm (+500k exp)

Opposing API's reported build,. DOE reports a Gasoline draw in the last week (while distillates built for the 4th week) and crude drew more than expected…

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Crude exports fell to the lowest level this year, at 517k barrels a day. But notably, Gasoline inventories dropped in the face of a big surge in gasoline imports…

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As we noted earlier, Gasoline demand was puking when it should be peaking in the middle of summer-driving-season… (but jumped in the last week)

20170621 gas 0 - WTI/RBOB Pump'n'Dump After Gasoline Build, Production Surge

 

And Inventories were surging when they should be tumbling…

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US crude production continues to trend higher with rising rig counts… highest production in the Lower 48 since Aug 2015

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As Bloomberg's Richard Stubbe notes, U.S. crude production continued its impressive rise, reaching 9.35 million barrels a day, the highest level in almost two years. Output was 8.7 million in late November, when OPEC announced it would cut production in an attempt to increase prices.

So far the result of that is the US has increased output by 635k barrels per day and prices have fallen $ 6 a barrel since Nov. 30.

Prices popped a little this morning on the heels of Iran's OPEC-cut comments, “the bounce that we’ve seen out of Iran isn’t particularly big to the upside when you consider how much ground crude has lost in the last couple of weeks,” says David Madden analyst at CMC Markets. “The technical trend that we have seen has been pretty clear to the downside.”

Then post-DOE data, WTI/RBOB jumped…

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But the gains did not hold…

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