WTI Extends Losses After Big Build In Crude, Cushing Stocks Soar Most Since Feb

WTI has accelerated its losses overnight following API’s surprise crude build and Saudi Arabia’s claims that it has now restored production at the Abqaiq and Khurais oil processing facilities to the levels they were operating at before recent attacks.

“With the oil market reassured that no material disruption to Saudi supply to its customers has occurred following the drone attacks on the Abqaiq processing facility, the oil price pursues its retreat from last week’s highs,” said Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA.

Putting inventories back in the spotlight – although the impact of Storm Imelda is likely to make the numbers a little more noisy than normal…

API

• Crude +1.38mm (-600k exp)

• Cushing +2.3mm – first build in 13 weeks

• Gasoline +1.9mm

• Distillates -2.2mm

DOE

• Crude +2.41mm (-600k exp)

• Cushing +2.256mm – biggest build since Feb 2019

• Gasoline +519k

• Distillates -2.978mm

A bigger than expected crude build and major rise in stocks at Cushing dominated the inventory data in the last week (though Storm Imelda may confuse numbers)..

Source: Bloomberg

US Crude Production rose back to record highs as the rig count continues to crater…

Source: Bloomberg

Having tumbled after API’s print last night, oil algos are confused following the DOE data – first kneejerking to lows than back up…

But after the initial chaos, prices are falling…

WTI has erased much of the post-Saudi refinery attack spike…

However, as Tchilinguirian concludes, “the oil market dodged a bullet, but there is no guarantee that another drone attack will not be repeated in the future.”

As Bloomberg Intelligence Senior Energy Analyst Vince Piazza warns: “We think a more sustained and higher crude risk premium is warranted, as the recent attacks on Saudi installations signal an escalation in the kingdom’s proxy war with Iran. A roughly $3-a-barrel rise seems modest, but we feel a demand downdraft from weaker economic trends remains a near-term driver as well.“