Analysis by Dr. Nancy Yamaguchi

 

The oil complex received a boost yesterday when the Energy Information Administration (EIA) released the official weekly supply data for the week ended July 14. West Texas Intermediate (WTI) crude prices closed above $47 per barrel (/b) for the first time since July 3.

 

The EIA reported across-the-board inventory drawdowns for crude (4.727 million barrels [MMbbls]), gasoline (4.445 MMbbls) and diesel (2.137 MMbbls). For these three commodities combined, it was the second-largest inventory draw this year, totaling 11.3 MMbbls. This went far beyond industry expectations. The American Petroleum Institute (API) data had reportedly showed a small crude stock build of 1.63 MMbbls, countered by major drawdowns of gasoline stocks (5.45 MMbbls) and diesel stocks (2.89 MMbbls).

 

Apparent demand for refined products rose strongly during the week, jumping by 1,220 thousand barrels per day (kbpd). However, among the product mix, gasoline demand dropped significantly by 194 kbpd. Distillate demand, in contrast, increased by 476 kbpd. The weekly demand figures tend to vary, and the EIA publishes finalized data with a two-month time lag. However, the weekly data may give important clues, and the market pays close attention.

 

U.S. crude production continued to rise despite recent low prices. The EIA reported that crude production rose by 32 kbpd for the week, rising to 9,429 kbpd, up from 9,397 kbpd during the week ended July 7.This was the highest level of crude production since the week ended July 31, 2015, nearly two years ago.

 

WTI opened at $47.09/b this session, up by 84 cents, or 1.82%, from yesterday’s opening price. Prices are $47.45/b at present, up by 36 cents today.

 

Diesel opened at $1.5504/gallon this morning. This was a major increase of 4.16 cents (2.76%) above yesterday’s opening price, based partly on the strong demand data. Diesel prices are $1.567/gallon currently, up by another 1.66 cents from today’s opening price.

 

Gasoline opened at $1.6152/gallon today, an increase of 3.03 cents, or 1.91%, from yesterday’s opening. Gasoline prices are $1.6255/gallon currently, up by 1.03 cents from today’s opening.