Consensus skewed by API numbers
The American Petroleum Institute was said to report a 12.1 million barrel drawdown in supplies in what would be one of the biggest jumps on record.
That initially sent oil up as much as 2.4% but it's trading up just 1.1% now. Part of the reason might have been that Tropical Storm Hermine disrupted operations.
Before the API numbers, the consensus estimate was for a 905K barrel build in oil supplies.
"Production was down because of a storm and imports were probably disrupted. Analysts must have forgotten how much of an impact a storm in the Gulf can have," analyst Phil Flynn said.
The market reaction to the report may depend on which part of the US the supply increase took place in. If it looks like it could be storm-related, the remainder of today's gain could fade.
There's also a matter of how much supplies might rally. A 12m build sets a high bar for the EIA report to surpass. The rule of thumb is that market pricing goes to around the midpoint of the consensus and the API number but today I think it might be to the high side, so anything less than an 8 million build could result in crude selling.
Naturally, the reaction depends on gasoline and distillate inventories as well. Also keep a close eye on production but that could also be skewed by the storm.
