WTI/RBOB Slide After Crude Inventory Hits Record High, Production Tops 9 Million Barrels

After API"s surprise draw across all major categories, DOE reported the 7th weekly crude build in a row (even as crude imports plunged). Gasoline, Distillates, and Cushing all saw draws even as crude production rose to new cycle highs - back above 9mm bbl/d.

So here is a question for the crude bulls from Bloomberg"s Javier Blas: the U.S. imported way less crude last week (down 1.2 million b/d week-over-week, to 7.3 million b/d) and exported again lots (1.2 million b/d, or nearly 100,000 b/d week-over-week). And yet, crude stocks build-up again. So where"s is the rebalancing?

API

• Crude -884k (+3.3m exp)


• Cushing -1.7mm


• Gasoline -893k (-1.5mm exp)


• Distillates -4.229mm

DOE

• Crude +564k (+3.25m exp)


• Cushing -1.528mm (-50k exp)


• Gasoline -2.628mm (-1.5mm exp)


• Distillates -4.924mm (-1.0mm exp)

7th weekly crude build in a row but major draws across the other categories...

Notably, Bloomberg"s Javier Blas points out that U.S. refinery intake traditionally reaches a seasonal bottom between the second half of February and the first half of March. Last week intake, at just 15.5 million, was already low already and any further reduction would make a big increase in crude stocks more likely. Refinery Utilization tumbled to its lowest since April 2013...

Furthermore, some crude that was on floating storage in so-called contango deals is coming now in-land, increasing imports; but U.S. Crude oil exports rose above one million barrels a day for the first time on record the week ended Feb. 10. WTI averaged $2.26 a barrel below global benchmark Brent this year, making U.S. crude more attractive to overseas buyers.

As a reminder, US crude inventories are already at a new record high...

As are gasoline inventories...

Gasoline demand rose in the last week but remains down over 5% YoY...the biggest drop in 16 years.

Production remains on a rising trend - back above 9mm barrels/day, tracking the lagged rig count and suggesting - noise apart - considerably more production to come...

Bloomberg"s Javier Blas concludes:

I don"t see yet any sings of the U.S. domestic oil market rebalancing, despite the best efforts by OPEC. What"s becoming more and more clear is that the domestic industry is ramping up activity faster than most have predicted. OPEC cuts have lifted prices and created space for U.S. production overseas. OPEC failed to kill shale, and now it"s throwing it a big economic incentive to prosper.

WTI and RBOB rallied overnight following the API data and while both initially spiked on the print, they are falling now.. what will happen 15 minutes after?

Finally we remind readers of what happens next...for the last four weeks, bang on at the 3:45 pm London time (15 minutes after the DOE release), the algo emerged when bearish EIA figures also triggered buying.

Just like it did last week...

And the week before...

And the week before that...

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No buying panic today yet...