WTI and RBOB prices are higher this morning following API's reported the biggest gasoline draw in history (compared to EIA data). Of course, disruptions (Florida demand and Texas supply) remain dominant but DOE reports a massive 8.4mm draw in Gasoline inventories - the biggest draw ever. The reaction in prices is anti-climactic as production rebounded and crude built dramatically to offset the exuberance.

Bloomberg's Javier Blas reminds readers that the report covers the period from 7:01 am on Friday, Sept. 1 to 7:00 am on Friday, Sept. 8. So a lot of disruption from Harvey (particularly from Sept. 1, 2, and 3) will still impact everything from refining intake to crude production and U.S. imports and exports.

API

  • Crude +6.181mm (+4.82mm exp)
  • Cushing +1.32mm (+1.6mm exp)
  • Gasoline -7.896mm (-1.5mm exp) - biggest draw ever
  • Distillates-1.805mm

DOE

  • Crude +5.888mm (+4.82mm exp) - biggest build in 6 mos
  • Cushing +1.023mm (+1.6mm exp- biggest build in 6 mos
  • Gasoline -8.428mm (-1.5mm exp) - biggest draw ever
  • Distillates -3.215mm - biggest draw in 6 mos

Bloomberg Intelligence energy analyst Vince Piazza notes that the impact from hurricane season will keep crude demand subdued, with roughly two million barrels of daily refining capacity off-line. Depressed gasoline consumption should persist temporarily on lower transportation use and suppressed refining utilization.

Gasoline inventories confirmed API's data and saw the biggest draw in history as Crude and Cushing saw major builds...

The bearish data point is that total U.S. petroleum inventories (that's crude, refined products, propane and the volatile "other oils" category) have built for the second consecutive week.

Total stocks up 1.7 million barrels, driven by big builds in crude, propane and other oils.

US Distillate exports fell to their lowest levels since 2010.

The massive collapse in US crude production last week - with most of Texas offline - has recovered somewhat with a 572k surge in production this week. However, it is clear that levels of production are well off pre-Harevy levels...

 

“We’ve had some supportive news from all three major oil industry bodies, OPEC seeing robust demand, IEA seeing the same and the EIA downgrading their outlook for U.S. production,” says Ole Hansen, head of commodity strategy at Saxo Bank.

“These are all things that point to a market that’s been in quite a better place than we’ve been in for a long time," and prices had gained following API's data, heading into the DOE data.

 

But it appears the biggest draw in history was not enough to hold RBOB prices up...