WTI Tumbles On Inventory, Demand Disappointments

WTI has traded sideways (below $69) since last night’s smaller than expected crude draw from API, but algos could not figure out what to do as crude inventories dropped notably but products and Cushing saw stocks rise.

Investors “will look at export numbers to get a handle on global demand to see if it is softening”, Phil Flynn, a senior market analyst at Price Futures Group, says. At the same time, the focus will be on refiner demand for crude with fall maintenance season beginning, he says.

NOTE – Tropical Storm Gordon won’t have any impact on this week’s report. It should show up in next week’s report.

API

Crude -1.17mm (-2.9mm exp)

Cushing +613k (+600k exp)

Gasoline +1.0mm

Distillates +1.8mm

DOE

Crude -4.302mm (-2.9mm exp)

Cushing +549k (+600k exp)

Gasoline +1.845mm (-1.5mm exp)

Distillates +3.199m (+700k exp)

Crude inventories drew down by a 4.3mm – considerably more than API and expectations – but Cushing stocks rose for the 4th week in a row and Gasoline and Distillates also both saw inventory builds.

Production was unchanged last week (remember that unless production rises by 100k, the incremental change in the new data is ignored).

Interesting, as the 2018 summer driving season draws to a close, Bloomberg notes that it hasn’t been a memorable one as far as gasoline demand is concerned. Consumption — measured on a four-week moving average basis — has lagged last year’s level, as stubbornly high pump prices crimped driving. Low deliveries in early August may support demand for a couple of weeks, but the trend is likely to be downward over September and October.

WTI drifted lower into the DOE data (touching $68.50) but knee-jerked higher on the DOE print that showed a bigger than expected crude draw, then faded back to unchanged as the rest of the data showed builds…