Big Gasoline Build Offset Crude Drawdown

Andrew Cummings
December 6, 2017

"If you extend the production-cut agreement through the end of 2018, that surplus will basically erode away, which will be a good thing for oil prices in the long-term", Rob Thummel, managing director at Tortoise Capital Advisors LLC, which handles $16 billion in energy-related assets, said in a Bloomberg Television interview.

Last week, the American Petroleum Institute (API) reported a surprise build of 1.821 million barrels of crude oil when analysts had expected a drawdown of 3.15 million barrels. Unprecedented flooding from the Category 4 storm that slammed into the state's coast last week, sending gasoline prices surging as oil refineries shut, may also set a record for rainfall in the contiguous us, the weather service said Tuesday. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.71% at $57.21 a barrel. Total volume traded was about 42 percent below the 100-day average.

For the same period, analysts had consensus estimates for a decrease of 3 million barrels in crude inventories, a rise of about a million barrels in gasoline and an increase of 1.74 million barrels in distillate stockpiles. The cartel's output dropped last month to the lowest in half a year.

Recent spurt in oil prices is triggering a response from the suppliers. But if prices top their hedged positions, that could push US producers into more drilling. Distillates rose by 4.26 million barrels.

Oil declined after industry data showed USA gasoline stockpiles expanded for the first time in four weeks. The global benchmark traded at a premium of $5.30 to February WTI. Traders have been at odds over frequent discrepancies between the API, which is also the oil and gas industry's main lobby, and the U.S. Energy Information Administration, an independent division of the Energy Department.

The United States Oil ETF (NYSEARCA: USO) traded down about 1.5%, at $11.37 in a 52-week range of $8.65 to $12.00.

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