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WTI Holds Gains After Big Crude, Gasoline Draws

Courtesy of ZeroHedge View original post here.

Oil prices continued to rise overnight on the heels of the double-whammy of storms in the Gulf as more than 84% of oil output in the Gulf of Mexico has now shut, while almost 3 million barrels a day of refining capacity has been closed.

“Oil traders will be pre-occupied with the developments of the hurricane today,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. “The most dangerous hurricane of the past 15 years is approaching the major U.S. oil producing and refining center.”

All of which makes today’s inventory data somewhat un-impactful since it is dated from before any shut-ins (although it could signal demand issues if it bucks the API-reported trend).

API

  • Crude -4.524mm (-4.3mm exp)

  • Cushing -646k

  • Gasoline -6.392mm (-2.7mm exp) – biggest draw since April 2019

  • Distillates +2.259mm (-700k exp)

DOE

  • Crude -4.689mm (-4.3mm exp)

  • Cushing -279k

  • Gasoline -4.583mm (-2.7mm exp)

  • Distillates +1.388mm (-700k exp)

Following API’s reported big draws in crude and gasoline, expectations for official data was for more draws and that was confirmed – the fifth weekly crude draw in a row…

Source: Bloomberg

Notably, Bloomberg’s Mike Jeffers notes that data from the Strategic Petroleum Reserve suggest that another 1.8 million barrels of crude was withdrawn from the SPR last week, so we’ll need to add that to any drop in commercial stockpiles to get a true picture. The volume of crude held in the SPR fell by 6.7 million barrels in the first three weeks of August, after increasing by 21.2 million barrels between April and July.

Additionally, as storms loom, there will typically be draws as drivers fill up to tanks to prepare or evacuate. Then comes a period of slow demand as folks stay put.

US Production rose modestly last week, after falling the prior week (and obviously will fall next week thanks to storm shut-ins) but we note that the rig count rose by 11 last week and we wonder if this is the trough for production in the short-term…

Source: Bloomberg

WTI was trending slightly lower, around $43.60 (up on the day), ahead of the official data, and was unchanged on the data..

Finally, Bloomberg notes that, on its current track, the storm could lead to around 10% to 12% of U.S. refining capacity being shut for more than six months, according to a disaster modeler with Enki Research. 

Tanker rates to ship gasoline from Europe to the U.S. are already surging even before Laura makes landfall.


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