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US crude oil stocks increased by 1.4 MMBbl. Gasoline inventories increased 1.8 MMBbl while distillate inventories decreased 1.0 MMBbl. Yesterday afternoon, API reported a crude oil build of 5.95 MMBbl alongside a gasoline build of 3.36 MMBbl and a distillate draw of 2.19 MMBbl. Analysts, to the contrary, were expecting a crude oil build of 1.6 MMBbl. Total petroleum inventories posted a decrease of 5.0 MMBbl.
US crude oil production remained unchanged last week, per EIA. Crude oil imports were up 0.22 MMBbl/d last week, to an average of 6.0 MMBbl/d. Refinery inputs averaged 16.4 MMBbl/d (0.52 MMBbl/d more than last week’s average).
Oversupply concerns pressured WTI futures for a second straight day on Tuesday, with selling pressure building throughout the session into the close. Front-month WTI ultimately settled at $55.21/Bbl (down $1.84/bbl), with one day left before expiration of the December contract. Virtually nothing has changed in market fundamentals, but expectations are increasingly being shaped by skepticism over whether OPEC and allied non-OPEC producers will be able to agree on further production cuts next month. As with prior OPEC+ agreements, Russian participation is critical but far from assured. Trade war concerns also continue to linger as progress on the “phase 1” trade deal between the US and China appears to have hit a wall. With President Trump refusing to lift tariffs on Chinese goods, Beijing may be watching the ongoing impeachment proceedings in Washington with an eye toward waiting out this administration.