Crude Oil Numbers Show Massive Build

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  • Anticipated 2.7 million barrel build
  • Actual build 9.3 million barrels
  • Markets rally anyway

The weekly crude oil inventories figure came out of the United States. This is a very volatile weekly measurement of how much crude oil is either being taken away from or added to storage. The market initially sold off as a reaction, but then turned around quite drastically as traders digested the news. Originally thought of as bearish, it now appears that the market is digesting longer-term headlines and perhaps concerns about geopolitical tension in the Middle East.

The numbers

The expected announcement of 2.7 million barrels added to the inventory was blown out by the addition of 9.3 million barrels. This was seen at the Cushing, Oklahoma facility, where 1.28 million barrels were added. However, gasoline inventories printed a -2.56 million versus the expected -1.37 million. In other words, it appears the Americans are burning through much more petroleum. Beyond that, distillate numbers came in at -3.82 million versus the anticipated -2.5 million. In a sense, the best way to look at it is that although there was a horrific headline, the internals certainly looked quite a bit more bullish.


The expected announcement of 2.7 million barrels added to inventory was blown out by the addition of 9.3 million barrels.


Beyond the announced figures, US crude oil refinery inputs average just a bit over 15 million barrels per day. This is 200,000 barrels per day less than the previous weekly average. Refineries operated at 83.1% of their capacity last week, and gasoline production decreased down to an average of 10 million barrels per day.


Crude oil imports into the United States averaged 6.3 million barrels per day, up 70,000 barrels from the previous week. During the last month, crude oil imports averaged about 6.3 million barrels per day, making the past week simply “average”. Worth noting, though, is that imports for crude oil into the United States are down 18.2% from the same month last year.


The US crude oil inventory figures are about 2% above the average five-year trend for this time of year. Because of this, there should still be an overhang despite the bullish internal figures. This simply should continue to create a volatile marketplace, as we have seen over the last several days.


The future for crude oil

The crude oil markets have been beaten down over the last month or so. With that being the case, it’s not a huge surprise that it wasn’t quite ready to sell off yet. However, it looks as if the market is well supported in general, so the markets may be willing to look through the numbers and perhaps focus on the potential drawdown in gasoline. This should have a bit of a knock-on effect in the crude oil markets themselves. With that being the case, not much will change as there is still massive support in the WTI grade at the $50 level just below.

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