US DATA: Sharp drop in crude stocks offset by products build - API

Quantum Commodity Intelligence – US crude oil stocks posted an unexpectedly steep drop for the week ending 29 September, according to a report released late Tuesday by the American Petroleum Institute, although a build in refined products largely offset the crude build in volume terms.

The latest API numbers revealed a 4.2-million-barrel drop against analysts' expectations for a draw of just 100,000 barrels, while the key Cushing storage hub, the delivery point for the WTI crude futures contract, rebuilt stocks to the tune of 830,000 barrels.

Cushing had fallen by around 6 million in the previous three weeks, according to API figures, leaving the hub at critically low operational levels, which at one point last week lifted the Nov23/Dec23 WTI backwardation to over $2.50/b but has since narrowed to around $1.75/b.

The Strategic Petroleum Reserve added 300,000 barrels as the low-scale buyback program continued after the Department of Energy released 180 million barrels from the SPR in 2022, but the recent surge in prices has stalled any further buying tenders to restock reserves.

Gasoline stocks rocketed by 3.95 million barrels last week, further weighing on Rbob prices, while distillate stocks added 350,00 barrels as refined products offset the crude draw.

The weekly API report serves as a forerunner to the closely watched Energy Information Administration Weekly Petroleum Status Report, which will be published later on Wednesday.

Meanwhile, the 3-2-1 crack spread, a measure of US refining profitability against gasoline and heating oil margins, slumped to around $19/b based on Nov23 futures contracts, compared to around $23.50/b at the same stage last week.