US Gasoline Inventories Soar; Crude Oil Has A Substantial Draw -- But It Must Be The Gasoline Inventories That Drove A 2% Drop In The Price Of WTI -- September 6, 2018

Updates

September 7, 2018: But take a look at this. Reuters suggests US crude oil stockpile decline -- more than expected last week -- is a bullish sign --  

U.S. crude stockpiles fell more than expected last week, while gasoline and distillate inventories rose.

Crude inventories fell 4.3 million barrels in the week to August 31, 2018, compared with analysts' expectations for a decrease of 1.3 million barrels. The decline brought stockpiles to 401.49 million barrels, the lowest levels since February 2015.

Stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose by 549,000 barrels, EIA said.

"The large crude oil inventory drawdown makes for a bullish report, despite the appreciable gains in refined product inventory levels," said John Kilduff, a partner at Again Capital Management in New York.

Refiners' demand for crude oil and drivers' demand for gasoline remain supportive of the market, with gasoline demand remaining near the highest levels of the season, he said. Still, he cautioned that rising stockpiles at Cushing were somewhat bearish.

 Original Post

This is certainly weird and proves the rule: predicting the price of oil is a fool's errand.

WTI falls 2% even though the EIA reports a substantial crude oil draw.

• US crude oil inventory draw of 4.3 million bbls; inventories now stand at 401.5 million bbls; my threshold = 400 million bbls; we're practically there
• refineries operating at only 96.6% capacity
• gasoline production decreased a bit last month; now averaging less than 10 million bbls/day over the past four weeks
• distillate fuel, on the other hand, is up about 3% over the past four weeks
• but jet fuel is the big story (and a lot of CO2 emissions): jet fuel product supplied was up over 5% compared with same four-week period last year
• but this is what is probably driving crude oil down in price today: total motor gasoline inventories increased by 1.8 million bbls last week -- an astounding 7% above the 5-year average for this time of the year -- with that inventory, one would think refineries will request less crude oil going forward, and already refinery are operating at less than 97% capacity after recently being near 99%

The gasoline demand graph:

Natural gas fill rate: link here.