WTI Drops Below Pre-Saudi-Cut Levels After API Signals Big Product Builds

Oil prices dipped lower today, back to basically unchanged since Saudi’s production cuts were announced as persistent economic uncertainty weighs on the outlook for demand.

Saudi Arabia’s production cuts “will take some supply off the market, but demand will need to continue to rise if we are to see much higher prices,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities.

The next sign we get is from API tonight (after last week’s surprise crude build) for signs of demand slowing.

API

Crude -1.71mm (+1.1mm exp)

Cushing +1.535mm

Gasoline +2.417mm (+200k exp) – biggest build since Feb 2023

Distillates +4.50mm (+1.0mm exp) – biggest build since Dec 2022

Crude stocks, according to API, unexpectedly drew-down last week but products saw unexpectedly large builds (distillates biggest weekly build since Dec 22).

Source: Bloomberg

WTI was hovering around $71.50 (pre-Saudi cuts) ahead of the API print and barely moved on the inventory data.

Finally, we note that the Biden administration sold another 1.8 million barrels of crude last week from the SPR – down to a fresh 40-year low.