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WTI Jumps After Harvey Prompts US Crude Production Collapse, Biggest Inventory Build In 6 Months

Courtesy of ZeroHedge. View original post here.

Last night's first glimpse of Harvey's impact on energy confirmed a sizable crude build but only modest gasoline draw. WTI/RBOB prices slid into the DOE print and extended losses after a bigger than expected crude build (+4.58mm vs +4mm exp). Gasoline and Distilates saw bigger draws than API reported but it was the collapse in Lower 48 crude production that stood out with most of Texas offline.

API

  • Crude +2.79mm (+4mm exp) – biggest build in 5 months
  • Cushing +669k (+1mm exp)
  • Gasoline -2.544mm (-5.2mm exp) – biggest draw in 6 weeks
  • Distillates -610k

DOE

  • Crude +4.58mm (+4mm exp)
  • Cushing +797k (+1mm exp)
  • Gasoline -3.20mm (-5.2mm exp)
  • Distillates -1.396mm

The inventory changes reported by the API were much smaller than those forecast by analysts. As a reminder, Saxo Bank's Ole Hanson notes that "inventory data later is a lot of moving parts which could be quite skewed away from what we’ve seen in recent weeks." Additionally, investors “are going to be skeptical of the data,” James Williams, an economist at energy researcher WTRG Economics, told Bloomberg. “It might be pretty flaky data this week and next, so I don’t expect to see a big market-mover”

Bloomberg's Fernando Valle notes energy's past week was all about Hurricane Harvey as refineries shuttered, choking output and hauling down inventories of gasoline and distillates.

Bigger than expected crude build and bigger gasoline and distillate draws than API reported…

As one might expect, Gulf Coat imports fell to a record low.

Production declined in the previous week, and with most of Texas ofline last week – Crude production in the Lower 48 collapsed…

WTI and RBOB have drifted lower after last night's API data, heading into the DOE data. The kneejerk reaction to the crude build, gas draw and production crash was higher prices…

Brent “reached the May high and so far it’s been firmly rejected,” says Ole Hansen, head of commodity strategy at Saxo Bank. “It’s quite significant if we are getting a decent rejection here as it could indicate a short-term top in the market”

“It’s a market that is starting to struggle to move much higher, Brent crude up to $55 is probably as good as it gets at this stage”: Hansen


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