After being extremely over bought with a record amount of hedge fund and large speculators long caused a sell off after a questionable report from the International Energy Agency’s, Traders hoping that the American Petroleum Institute weekly supply report would perhaps add some clarity only added to the confusion. In a major mixed bag of a report the API reported a massive and unexpected 6.513 million barrels’ increase in weekly supply.

The API in recent weeks has been reporting major drops in supply much more than the reports from the Energy Information Administration (EIA), that we get today. Is this build from the API, that was almost 6 times the build than the medium estimate corrects or is the drop an attempt to level out their total number to get in line with the more modest draws that we have been getting from EIA? We will find out today.

Yet, at the same time the API reported much larger than expected drop of 1.803 million barrels at the Cushing Oklahoma delivery point. The big drop there means that we must have seen massive increases in supply in other oil pads or the API is just playing catch up. The wide discrepancy is raising some eyebrows.

RBOB futures lead the selloff and one reason may be increasing supply and signs the refiners are getting ahead of record U.S. gasoline demand. The API reported a larger than expected increase in gasoline of 2.399 million barrels. Demand for distillates is rocking as farmers are bringing in some record yielding crops. The API reported very large 2,527 million barrels drop in weekly supply. The “Street Account consensus” is for crude oil to be up 700,000 barrels. Gas inventories are down 130,000 and distillate inventories are down 1.93 million barrels for the EIA report today.

Then you have the OPEC meeting. OPEC and Non-OPEC has stunned the world with their record breaking compliance to cuts, but now the question is can they keep it up. Reports that Russia is questioning that an extension of cuts might be needed after Nov. 3 is probably right but misses the point. It is not whether or not they will be needed, because they probably won’t, because of demand growth, but the signal it sends to the market and that is what the trade will focus on.