After yesterday's bloodbath in the energy complex (OPEC/Saudi comments), WTI slipped back to a $65 handle after the big API-reported crude build but has recovered to break $67 overnight as stocks recovered and Iran anxiety picked up again.

However, DOE confirmed the major build, though the 6.35mm was bigger than the expectation of a 3/7mm build, it was less than API's 9.88mm build. WTI rallied on this 'better' news, helped by a big draw in Gasoline stocks.

API

  • Crude +9.88mm (+3.7mm exp) - biggest since Feb 2017

  • Cushing +971k (+1.5mm exp)

  • Gasoline -2.8mm

  • Distillates -2.44mm

DOE

  • Crude +6.35mm  (+3.7mm exp)

  • Cushing +1.371mm (+1.5mm exp)

  • Gasoline -4.826mm (-1.75mm exp) - biggest draw since March 2018

  • Distillates -2.262mm

As refineries finish seasonal fall maintenance soon, it’s likely we’ll see smaller crude builds or even declines in the next few weeks, according to Thomas Finlon, director of Energy Analytics Group, but for now, crude continues to build. This week saw the 5th weekly build in Crude and Cushing stocks but Gasoline stocks tumbled most since March and Distillates are down for the 5th week in a row...

As Bloomberg's Catherine Ngai notes, the crude build was across the board (with the exception of the Rocky Mountain, which slipped ever so slightly). Some hefty builds in the Midwest and Gulf Coast with plants in turnaround mode.

“Sentiment in the crude-oil market has -- surprisingly fast -- turned from the ‘$95 in a matter of weeks’ on Iran sanctions to long liquidation and despair,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “Not helping the fragile sentiment was the weekly oil report from the American Petroleum Institute which showed a near 10 million-barrels jump in crude stocks.”

WTI popped back above $67 on the print (perhaps as algos react to the gasoline draw)...

Just weeks after oil traders were touting $100 a barrel, those predictions seem a distant memory. Oil is trading more than $10 lower than it was earlier this month, and “next year’s oil balance is bearish, let’s face it,” said PVM Oil Associates Ltd.

Notably the Brent Dec.-Jan. spread flipped into contango of as much as -7c for the first time since August

Additionally WTI-Brent spread compressed dramatically this morning...