WTI/RBOB Sink After Surprise Gasoline Build, Crude Production Rise

Amid record crude exports, DOE reported a surprise draw in crude inventories and surprise build for gasoline inventories which along with another rise in crude production sent both WTI and RBOB lower in the initial market reaction.

DOE

Crude -1.85mm (+3.1mm exp)
Cushing +1.18mm (+750k exp)
Gasoline +1.1mm (-1.1mm exp)
Distillates -814k (-2.05mm exp)

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Distillate demand falls 12.15% to 3.75 million barrels a day -- the lowest since early June. Inventories fell by a smaller-than-expected 814,000 barrels.

Total crude exports jumped to a record as tankers cleared a backlog at Gulf Coast ports and the Brent-WTI spread surged over the past two weeks...

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Bloomberg Intelligence energy analyst Fernando Valle:

The wide WTI-Brent differentials were a major incentive for U.S. refiners to quickly ramp up production following disruptions.

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That drove the moderate crude draws and disappointing figures for refined product stocks this week.

But there are reasons to remain bullish on cracks; demand remains elevated for gasoline and distillate despite the effects of hurricanes and the end of summer driving season, and it likely will boost 3Q refining earnings.