Oil is trying to stand tall against the onslaught of trade war fears and a report that showed oil supply rising. The American Petroleum Institute reported yet another 2.81-million-barrel increase in U.S. supply. The increase, if confirmed by the Energy Information Administration (EIA), would be the third increase in a row. It may also be an increase that will continue to give the market a false sense of security as the overall commercial petroleum inventories continue to tighten.

Gasoline supply notably fell by 2.83 million barrels last week, falling further below the average range for this time of year. While the break in crude oil prices may help pause the recent spikes at the gasoline pump, the overall tightness in gasoline supply will keep the prices from falling much more.

Distillates are even further below the five-year average, raising concerns about more price spikes for truckers and farmers. Even though the draw was only 834,000 barrels, the market is tight. It will get even tighter when the new maritime fuel regulations go into effect.

Still, the price of oil was impacted more by the trade war headlines that sent stocks down over two percent and sent the VIX fear index back above twenty with a rash of bond buying as traders looked for safe harbor. Yet the trade war and tariffs have not had a negative impact on oil demand that many had previously predicted.

Oil also held its spike Monday low even with the outside selling pressure. That shows that we could have put in a near term low. Outside support is also coming from geopolitical worries, and while the market is not panicking about increasing tensions with Iran, they are not ignoring them either.

So today may be a key day. Oil bears need to take out $60 a barrel to keep the downward trend momentum. They may need help to do that. Perhaps a very bearish EIA report might do that. Also, look at the EIA report for another Strategic Petroleum Reserve (SPR) release today.

Speaking of the EIA, it appears that they are raising their price outlook for oil, as well as its U.S. oil production estimates. The EIA highlights in the May Short-Term Energy Outlook, “EIA increased its forecast for average Brent spot prices in 2019 and 2020 by about $5 per barrel. The increase accounts for near-term tightness in oil markets and increasing supply disruption risks in several oil-producing countries. EIA expects some tightness in global oil markets during the second and third quarters of 2019 but anticipates that growing production in the United States and key OPEC countries will ensure that global supplies continue to meet demand moving forward. EIA expects drilling activity in the United States to increase in response to recently rising crude oil prices. EIA’s May forecast now expects U.S. crude oil production to reach an average of 13.4 million barrels per day in 2020, up 300,000 barrels per day from April’s outlook. According to the May outlook, EIA still expects that the United States will begin exporting more petroleum and other liquids than it imports in the fourth quarter of 2019, continuing for the foreseeable future. The shift toward becoming a net petroleum and liquids exporter marks a first for the United States since 1948.”

EIA Natural gas production: “EIA continues to forecast that U.S. dry natural gas production will reach new records in 2019 and 2020. The forecast indicates that this year will mark the first time U.S. production will exceed an average of 90 billion cubic feet per day.”

EIA Electricity natural gas: “In the May outlook, EIA continues to forecast that the share of utility-scale electricity generation from natural gas will grow over the next two years. By 2020, natural gas-fired power plants will produce nearly 38% of all U.S. utility-scale generation.”

EIA Electricity renewables: “EIA forecasts that U.S. electricity generation from renewables, including hydropower, will generate about 20% of all U.S. power by the end of 2020. Within the renewables mix, the forecast suggests that wind power will overtake hydropower this year as the leading source of renewable energy.”

EIA Electricity nuclear: “The EIA’s May Short-Term Energy Outlook, forecasts that nuclear’ s share of U.S. utility-scale electricity generation will hold at 19% through 2020.”

EIA Electricity coal: “EIA’s May outlook forecasts that coal’s share of U.S. utility-scale electricity generation will decrease to 24% in 2019 and to 22% in 2020.”

EIA Emissions: “The May outlook forecasts that energy-related carbon dioxide emissions will decrease by 2.1% in 2019 and a further 0.8% in 2020. EIA attributes a significant part of this decrease to milder expected weather and to the growing use in the power sector of natural gas, which emits less CO2 than coal. This forecast, however, is sensitive to external factors, such as weather and economic activity.”