Last night's unexpected API builds knee-jerked prices lower but a weaker dollar helped levitate WTI/RBOB into the DOE print. While tropical depression Cindy may have affected the data, DOE reports a small build in crude (expectations for a draw) but all eyes were on gasoline which drew 894k, well below API's build levels and expectation of no change. Production in the Lower 48 fell 55k b/d - the biggest drop since Aug 2016 (likely impacted by Cindy).

API

• Crude +851k (-2.25mm exp)
• Cushing -678k
• Gasoline +1.351mm (unch exp)
• Distillates +678k (+350k exp)

DOE

• Crude +118k (-2.25mm exp)
• Cushing -297k (-600k exp)
• Gasoline -894k (unch exp)
• Distillates -223k (+934k exp)

Figures will be tricky to interpret because of impact from tropical depression Cindy, and notably, the Colonial Pipeline shipping demand fell to its lowest level in six years indicating the East Coast is well-supplied and the economics to ship from the Gulf Coast are unattractive.

The levels are de minimus for sure...but enough to spike WTI/RBOB with their extreme positioning...

As Bloomberg's Javier Blas notes, forget about crude oil, look at gasoline. The glut in crude appears to be shifting into products as refiners run their plants at record pace. As the 10-year seasonal chart below shows, U.S. gasoline stocks remain above the highest level for this time of the year.

But demand for gasoline continues to slide - very unseasonally...

Tropical Depression Cindy will likely have had some impact on U.S. oil production last week, as Bloomberg's Brad Gilbert notes that shutting in about 3 percent of the most recently reported lower 48 production number on 06/21 and 06/22. That being said, the impact should still be small and against increasing production, lower 48 production this weeks looks like it could drop by about 60,000 barrels a day as a result.  

And it did - Lower 48 Production fell 55k b/d last week - the biggest drop since Aug 2016...

A tumbling dollar (on more comments from Sintra this morning) helped rejuvenate WTI/RBOB prices overnight and while the initial algo reaction was to kneejerk lower, prices are rising back to pre-API levels...

“We think the oil price will continue to range trade from $40/bbl to $55/bbl for the foreseeable future,” says James Butterfill, head of investments and research at ETF Securities. “It doesn’t surprise me that the oil price is starting to stabilize now as it’s close to our lower end of $40 a barrel”