While last night’s API-reported crude build may have been a sign, DOE just reported a crude build twice as large (and massively larger than the expected draw). This sent WTI back below $65, near 2-month lows.

API

DOE

Record-high refinery runs couldn’t keep crude stockpiles from surging – The 6.88mm crude build is the biggest since March 2017 (and Cushing stocks surged after 12 weeks of draws) as Distillates inventories rose for the 3rd week in a row…

US Crude production ticked up (remember that new formulations mean that production jumps in 100k intervals now). The increase in production looks to be due to higher production from Alaska, driven by an increase at Prudhoe Bay, which had been lower for the past several weeks.

All of which sent WTI back below $65…

To 2-month lows…

As Bloomberg notes, August is a bad month for WTI to be suffering from a bouncing dollar and worries about demand destruction from trade wars and EM currency weakness causing economic slowdowns. That’s because crucial late-summer oil-product demand data has been damaging, and might again damage, the bullish case through stockpile builds. Last week’s EIA data showing the largest gasoline build for early August in the last 20-plus years is colliding with this week’s EIA-reported biggest crude build in 17 months is not supportive of the ‘no brainer’ crude narrative.