WTI Extends Losses After Massive Product Inventory Builds, Large SPR Add

Oil prices are sliding back again this morning, after surging yesterday to erase Tuesday’s losses, following a bigger than expected crude draw reported by API (but notably large product inventory builds).

Broad ‘risk-off’ sentiment in markets to start the year (and dollar strength) appear to be dulling any impact from possible supply disruptions in Libya for now.

API

Crude -7.42mm (-3.00mm exp)

Cushing +765k

Gasoline +6.91mm

Distillates +6.69mm

DOE

Crude -5.50mm (-3.00mm exp)

Cushing +706k – 11th weekly build in a row

Gasoline -10.9mm – largest build ever

Distillates -10.9mm – largest build since Jan 2019

Crude inventories declined for the second week in a row (more than expected) but gasoline and distillate stocks exploded higher…

Source: Bloomberg

Bloomberg’s Alex Longley notes one key thing to remember with all this data is that it essentially covers the final week of the year. That’s a time when the figures can get wonky for all kinds of reasons– tax purposes if you’re holding barrels in Texas, swaths of the country celebrating the holiday period, etc. So it’s worth taking some of the more extreme numbers with a grain of salt.

The Biden administration added 1.055mm barrels to the SPR last week – the largest addition since June 2020…

Source: Bloomberg

Stockpiles at the crucial Cushing hub continued to rise, now at their highest since July 2023…

Source: Bloomberg

Gasoline and Distillates stocks are at their highest since Q1 2022…

Source: Bloomberg

US crude production decline by 100k b/d last week but continues to hover near record highs…

Source: Bloomberg

WTI was hovering just below $72.50 ahead of the official data and extended losses after…

Crude earlier rallied as much as 1.8% as protesters in Libya shut output from from yet another oil field. The disruptions at the Sharara and El-Feel fields may take more than 300,000 barrels a day off the market.

Traders also are monitoring the volatile situation in the Red Sea, with Houthi militants claiming to have attacked another merchant ship this week.