Crude Levels Drop Again

Crude oil prices have remained just below recent highs this week. This was supported by the latest report from the Energy Information Administration which showed a further decline in US crude stores.

The EIA reported that in the week ending August 7th, US crude inventories fell by a further 4.5 million barrels. While this was a little less than the market forecast of a 4.7 million barrel decline, it marks the third consecutive week of inventory reductions. It also offers further encouragement that the US economic recovery is translating into better demand for oil.

Despite the fall in headline crude levels, regionally, the Cushing delivery hub in Oklahoma, the largest in the country, saw inventory levels increasing slightly by 1.3 million barrels.

US crude imports came in lower by 389k barrels over the week, averaging 5.6 million barrels per day. Over the last four weeks, crude oil imports have averaged roughly 5.7 million barrels per day. This is around 20% lower than the same four-week period last year.

Gasoline & Distillate Inventories Fall

Elsewhere, the report shows that gasoline inventories also decreased over the week. Gasoline inventories fell by 0.7 million barrels.

The market has received this news quite well as it marks the first week where crude and gasoline inventories have fallen together. This offers further encouragement over the pace of the recovery.

Gasoline inventories are now sitting around 8% higher than the five-year seasonal average. Distillate fuel inventories were also lower over the week, falling by 2.3 million barrels. They are now sitting around 24% higher than the five-year seasonal average.

Levels of Products Supplied Falling

In terms of gauging the level of demand in the market, the total products supplied figure (often used as a proxy for measuring demand) came in lower by 14.3% in the same period last year.

This averaged 18.5 million barrels per day. The gasoline products supplied figure was seen 10.2% lower in the same period last year at 8.7 million barrels per day while the distillate products supplied figure was seen 9.3% lower against the same period last year, averaging 3.6 million barrels per day.

In all, this was a solid inventories update which has helped keep oil prices supported at current levels.

The reduction in OPEC+ supply restrictions has caused a loss of upside momentum recently, as has the increase in second wave fears. For now, though, with the weekly inventory reports showing increasing demand, the outlook remains bullish.

Crude Continues to Challenge Resistance

Crude oil prices continue to put pressure on the 42.61 level resistance. Momentum has weakened significantly on this last, slow grind higher with the RSI indicator showing bearish divergence. However, while price continues to hold above the 33.17 level support, the focus remains on a further push higher and a breakout to the 78.6% retracement of the decline from 2020 highs around the 52 level.