WTI extended losses this morning after a brief bounce on API's unexpected crude draw, pushing down to one-month lows below a $70 handle after DOE reported an unexpectedly large crude build.

API

• Crude -2.13mm (+2.5mm exp)
• Cushing +1.5mm
• Gasoline -3.4mm
• Distillates -246k

DOE

• Crude +6.49mm (+2.5mm exp)
• Cushing +1.78mm
• Gasoline -2.016mm (+600k exp)
• Distillates -827k

This is the 4th weekly build for crude (and Cushing stocks) in a row...

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Bloomberg Intelligence Energy Analyst Fernando Valle notes that gasoline margins will remain challenged as demand wanes after summer driving season.

WTI traded with a $70 handle ahead of the DOE data - at the low end of the last week's range - and then legged down on DOE's big crude build...losing the $70 handle.

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*NOK, CAD, AUD TO SESSION LOWS VS USD AS WTI OIL FALLS 3%

However, not everyone agrees with the market's direction:

“Our basic premise is that prices will move higher”, said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London.

“As Iran’s supply losses are fully realized and Venezuela suffers continuous decline, global spare production capacity will ebb and -- against a backdrop of average inventories -- the market will become more sensitive to adverse supply shocks”.

Meanwhile, WTI Midland’s discount to WTI at Cushing narrowed to $4.50/bbl on Tuesday, smallest since June 21...

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