WTI Drops After Big Surprise Gasoline Inventory Build

WTI Drops After Big Surprise Gasoline Inventory Build

Oil prices continued their exuberant ‘Omicron Schmomicron’ rebound overnight with WTI back above $71.50 ahead of this morning’s official inventory and production data. Amid utter carnage in the European power markets, US energy markets remain relatively calm.

“Data remains supportive, with supply outages, elevated flight activity and congestion on roads resulting in still falling inventories,” said Giovanni Staunovo, commodity analyst at UBS Group AG.

“Concern on new mobility restrictions impacting oil demand as a result of the omicron variant is keeping prices in check, however.”

 

DOE

  • Crude -4.715mm (-3.15mm exp, API -3.67mm)

  • Cushing +1.463mm

  • Gasoline +5.533mm – biggest build since June

  • Distillates +396k

After a big draw last week, analysts expected another sizable drop in US crude stocks and they were right as crude inventory drew down 4.7mm barrels (more than the 3.15mm expected). Cushing stocks rose for the 6th straight week. Most notably, Gasoline stocks surged higher last week by 5.5mm barrels – the biggest weekly build since June…

Source: Bloomberg

US crude production dipped last week…

Source: Bloomberg

WTI hovered around $71.50 ahead of the DOE print, and slipped after the big gasoline stock build…

Trading is starting to wane into the Christmas period. Average Brent crude futures volumes over the last 15 days are the least in two months, while WTI open interest has plunged to its lowest since 2016.

Finally, we wonder when the demand for a shift away from NatGas (EU gas is trading an oil barrel equivalent price over $350) in European power producers will spur a pull in crude demand…

That is quite a differential.

 

 

Tyler Durden
Wed, 12/22/2021 – 10:37

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