WTI Rebound Stalls As Gasoline Demand Slide Continues

Oil prices rebounded dramatically overnight after API reported a surprise build and Trump’s rejection of the COVID Lockdown Relief Bill sent WTI down to almost a $45 handle before a weaker dollar and an odd equity bid lifted commodites broadly.

“Jitters surrounding the new strain of the virus remain front and center,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.

“The specter of fresh restrictions now hangs over Europe together with the prospect of a drawn-out recovery.”

For now, all eyes will be on crude stocks as lockdowns spread across the states…

API

• Crude +2.70mm (-3.1mm exp)

• Cushing +341k

• Gasoline -224k (+600k exp)

• Distillates +1.03mm (-1mm exp)

DOE

• Crude -562k (-3.1mm exp)

• Cushing -26k

• Gasoline -1.125mm (+600k exp)

• Distillates -2.325mm (-1mm exp)

Analysts expected a second weekly draw after crude’s huge build 2 weeks ago, as API’s build is shrugged off for now, and DOE delivered.. but only small with a mere 562k barrel drop in stocks. Inventories in Cushing also fell along with products seeing drawdowns…

Source: Bloomberg

The 4-week average of Implied Gasoline Demand dropped for the 10th straight week..

Source: Bloomberg

US Crude Production remained flat at 11mm b/d for the 3rd week…

Source: Bloomberg

WTI traded around $47.80 ahead of the official data this morning and slipped modestly after…

The threat to near-term demand from additional stay-at-home measures has rippled across oil markets.

Brent contracts for prompt delivery are back at a discount against later deliveries – a bearish pattern known as contango.