It's Always A Surprise -- October 11, 2017

In about ten (10) hours we will get the official EIA data when the "Weekly Petroleum Report" is released. If the EIA data mirrors the industry data, there will be a surprise increase in US crude oil inventories. From Bloomberg:

Oil pared gains after an industry report was said to show a surprise increase in U.S. crude inventories.

Prices pulled back in after-market trading following the release of data from the American Petroleum Institute Wednesday, which was said to show crude stockpiles increased by 3.1 million barrels last week. A Bloomberg survey estimated that U.S crude stockpiles slid by 2.4 million barrels last week.

Crude supplies in Cushing, Oklahoma, the biggest U.S. oil-storage hub, climbed by 1.22 million barrels, the API data showed. That would be a seventh straight increase, if Energy Information Administration data released on Thursday confirms it.

“It was a little bit of a surprise. The last two weeks of exports-- I don’t think will be maintained. I think this is a reflection of that to a certain extent,”  Kyle Cooper, director of research at IAF Advisors in Houston, said by telephone. The recent builds at Cushing and the potential for another “is certainly a bearish factor for WTI.”

On Wednesday, OPEC said in its monthly report that 2018 demand will be about 200,000 barrels higher than previously predicted, and that output caps adopted by most producers are trimming a global glut. Yet at the same time, the EIA raised its forecast for U.S. crude production in 2018.

If this is accurate -- that US crude oil inventories have increased, it supports the view that WTI will not reach $60 by the end of next year (2018) and won't hit $70 until at least next decade. Previously posted.

Once the EIA data is posted tomorrow, I can calculate the length of time it will take to rebalance supply / demand.