US Crude Oil Inventories Increased -- Oh, Oh -- The Red Queen Has Not Fallen Off Her Treadmill -- November 8, 2017

US crude oil inventory: has been released. Oh-oh. The numbers: +2.2, -3.3, and +9.6. Oh-oh. WTI: $56.60 -- dropped about 60 cents after report released.

CNBC is reporting that -- surprise, surprise, surprise --

• US crude oil inventories surprisingly increased by 2.2 million bbls; now at 457.1 million bbls
• US gasoline inventories dropped 3.3 million bbls; and,
• US produced a record 9.6 million bopd -- the Red Queen has not fallen off her treadmill

From the report (linked above), in addition to numbers above:

• refinery inputs up almost 300,000 bopd, but still operating below 90% capacity (89.6%)
• gasoline production actually decreased last week; averaging 10.2 million bbls/day
• distillate fuel increased last week; averaging 5.2 million bbls/day
• crude oil imports averaging slightly more than last year

Comments: tea leaves suggest US production will continue to increase (seasonally adjusted) --

• US operators are targeting $27-oil as their breakeven point
• with Brent oil at $64 and narrowing WTI-Brent spread, operators are hedging their oil (probably putting their floor at $56 - transportation costs)
• no indication that crude oil demand will decrease over the short term
• OPEC extends cuts; has been losing market share in Asia
• even CLR has announced first shipment of Bakken oil to Pacific
• US infrastructure in place

Re-balancing: due to the "surprising increase of a 2.2 million-bbl increase in US crude oil inventories, the number of weeks to "re-balance" has increased from 38 weeks (previously) to 42 weeks (currently).

Week	Date	Drawdown	Storage	Weeks to RB
Week 0	Apr 26, 2017		529.0	180
Week 1	May 3, 2017	0.9	528.0	198
Week 2	May 10, 2017	6	522.0	50
Week 3	May 17, 2017	1.8	520.2	59
Week 4	May 24, 2017	4.4	515.8	51
Week 5	May 31, 2017	6.4	509.9	41
Week 6	June 7, 2017	-3.3	513.2	60
Week 7	June 14, 2017	1.7	511.5	57
Week 8	June 21, 2017	2.5	509.0	62
Week 9	June 28, 2017	-0.2	509.2	71
Week 10	July 6, 2017	6.3	502.9	58
Week 11	July 12, 2017	7.6	495.3	47
Week 12	July 19, 2017	4.7	490.6	43
Week 13	July 26, 2017	7.2	483.4	38
Week 14	August 2, 2017	1.5	481.9	51
Week 15	August 9, 2017	6.5	475.4	35
Week 16	August 16, 2017	8.9	466.5	30
Week 17	August 23, 2017	3.3	463.2	29
Week 18	August 30, 2017	5.4	457.8	27
Week 19	September 7, 2017	-4.6	462.4	32
Week 20	September 13, 2017	-5.9	468.2	39
Week 21	September 20, 2017	-4.6	472.8	46
Week 22	September 27, 2017	1.8	471.0	46
Week 23	October 4, 2017	6.0	465.0	41
Week 24	October 12, 2017	2.8	462.2	40
Week 25	October 18, 2017	5.7	456.5	37
Week 26	October 25, 2017	-0.9	457.3	39
Week 27	November 1, 2017	2.4	454.9	38
Week 28	November 8, 2017	-2.2	457.1	42