Analysis by Dr. Nancy Yamaguchi


Oil prices dropped yesterday upon the release of the Energy Information Administration’s (EIA’s) weekly supply data. West Texas Intermediate (WTI) crude prices are currently back down in the range of $44.50 – $45.00 per barrel (/b), though they are back up from lows of $44.05/b overnight. Product prices also fell overnight and are currently trending back up.


The EIA report should have been viewed as more bullish than it was. The data revealed across-the-board inventory draws of 6.299 million barrels (MMbbls) crude, 3.669 MMbbls gasoline and 1.85 MMbbls distillate.


Compared to the earlier estimates released by the American Petroleum Institute (API), the official EIA data was far and away more constructive for the supply-demand balance. The API had reported a 5.8-MMbbl drawdown in crude oil inventories. The API also reported a major increase in gasoline stockpiles of 5.7 MMbbls, plus a 0.4-MMbbl addition to distillate stockpiles.


The inventory drawdown seemed to be overshadowed by the increase in U.S. crude production, which the EIA reported to have risen by 88 thousand barrels per day (kbpd) during the week ended June 30. However, we noted last week that U.S. crude production had dropped sharply by 100 kbpd during the week ended June 23. Most of this was caused by shut-in production during Tropical Storm Cindy. So, it is not surprising that crude production rebounded, and it should not be interpreted as an increase in U.S. supply.


The Bureau of Labor Statistics (BLS) has just released the Jobs Report for June. The unemployment rate rose slightly to 4.4%, up from 4.3% in May. Non-farm payroll employment rose by 222,000, surpassing predictions of 178,000.


WTI crude prices are in the $44.50/b – $45.00/b range this morning. Yesterday, WTI prices showed an up-down cycle, rising to $46.53/b then falling to a close of $45.52/b. WTI opened at $45.35/b today, down by 30 cents from yesterday’s opening price. Prices are $44.61/b currently, down by 74 cents from today’s opening price.


Diesel opened at $1.4775/gallon this morning. This was a drop of 1.46 cents (0.98%) below yesterday’s opening price. Current prices are $1.4527/gallon, down by 2.48 cents from today’s opening price.


Gasoline opened at $1.5238/gallon today, up by 0.33 cents, or 0.22%, from yesterday’s opening. Prices are $1.4995/gallon currently, down by 2.42 cents from today’s opening price.