WTI/RBOB were sinking into the DOE data, despite API’s solid crude draw data, after tagging $62/$1.81 overnight. Official data confirmed API’s with the seventh straight week of crude builds (biggest crude build since Aug) and gasoline draws but it was distillates’ massive build (most since Dec 2016) that stood out.

A pull-back in prices might be seen if builds in gasoline and distillate inventories are larger than a crude oil decline, according to Bob Yawger, director of the futures division at Mizuho Securities USA. Yet, a second weekly drop in U.S. crude production would be “a bullish indicator.”

Bloomberg’s Intelligence Energy Analysts Fernando Valle and Vince Piazza note the potential weather effects…

Although winter usually ushers in a slowdown in demand, refiners are being encouraged to use domestic crude instead of imports tied to the Brent benchmark, whose price remains elevated because of Middle East tensions.

Cold weather in the Northern Hemisphere is having diverging effects on distillates and gasoline. It’s making distillate refining margins larger, putting downward pressure on supplies, while gasoline cracks are likely to narrow as frigid temperatures discourage domestic demand and exports.

API

DOE

This is the seventh straight week of crude draws and gasoline builds but it is distillates’ massive 8.9mm builds (the most since Dec 2016) that stands out… As Bloomberg notes, Distillate shipments were the lowest since ports were shut post-Hurricane Harvey in September. That accounts for at least 2.5 million of the distillate stock build.