WTI gave back overnight (Iran sanctions) gains coming in to the API print unchanged, then whipsawed up and down after a bigger than expected crude draw was offset by big builds on the product side.

API

Crude -6mm (-3mm exp)

Cushing -576k (-1mm exp)

Gasoline +3.1mm

Distillates+1.8mm

After another surprise crude build last week, API was expected to be a decent draw and did but the big builds on the product side offset the gains.

Additionally today, Energy Information Administration forecasts domestic oil output to average 11.7 million barrels a day next year, down from a previous estimate of 11.8 million a day. The agency also lowered its outlook for output this year. Last month, the agency said the U.S. is set to become the world’s top oil producer in 2019. The EIA still sees production reaching 12 million barrels a day by the end of next year.

“The initiations of the sanctions against Iran is one factor” elevating oil prices, said Bart Melek, head of global commodity strategy at TD Securities in Toronto.

After last night's post-Iran sanctions chaotic moves in China oil...

WTI managed to give back most of the overnight gains ahead of the API print, but after the algos initially went wild (jerking higher and lower) before settling back at unchanged-ish...

“There’s a wide range of estimates of how much Iranian exports will decline and a lot of uncertainty about how much the Saudis will increase,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “People are waiting to see some actual data.”