WTI/RBOB Bounce After Crude Draw Despite New Record Production

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WTI/RBOB prices traded lower since last night’s API-reported surprise crude draw but a 1.404mm draw (and bid gasoline draw) reported by DOE prompted a buying knee-jerk in prices. Production continued to rise to a new record high.

Ahead of the data, Bloomberg explained that the number to watch today will be gasoline exports, which can typically drift lower this time of year as more product goes to domestic customers in advance of the summer driving season. If growing U.S. production and high refinery runs churning out gasoline are met with clues that domestic demand isn’t matching up to expectations, the crude price that has a lot of geopolitics baked in may falter still.

API

DOE

DOE reports a draw – smaller than expected, but dramatically different from API’s surprise build. Gasoline stocks continued to slide but distillates draw seems to have stalled…

U.S. Fuel demand fell 1.12% in past four weeks, but gasoline exports jumped last week…

Crude production continues to surge – up 20k b/d to a new record high last week – but there have been signs out of the Permian basin that pipelines are full and rail shipments aren’t making up the difference in getting barrels out of West Texas to markets.

Overnight gains from the kneejerk lower after API faded this morning ahead of DOE but bounced on the surprise crude draw…

However, as Bloomberg notes, despite oil’s surge to near $80 a barrel, some corners of the market that reflect the trading of actual barrels are weakening fast.

The nearest Brent time-spread weakened its backwardation to as little as 6 cents on Wednesday, compared with about 60 cents a month ago. That’s in part because for the coming months cheaper U.S. crude is set to flood across the Atlantic, while demand for Brent grades from traditional buyers in Asia has been muted, according to Citigroup Inc. analyst Chris Main.