Oil Markets Test Session Highs As Crude Inventories Decline

Key Insights

• Crude inventories decreased by 0.5 million barrels from the previous week. 
• Strategic Petroleum Reserve declined from 355.4 million barrels to 353.6 million barrels. 
• Domestic oil production grew from 12.2 million bpd to 12.4 million bpd. 

On June 7, EIA released its Weekly Petroleum Status Report, which indicated that crude inventories declined by 0.5 million barrels from the previous week. Analysts expected that crude inventories would grow by 1 million barrels.

Total motor gasoline inventories grew by 2.7 million barrels, while distillate fuel inventories increased by 5.1 million barrels. Oil imports averaged 6.4 million bpd, declining by 0.8 million bpd from the previous week.

The report showed that the U.S. continued to sell oil from the Strategic Petroleum Reserve. SPR declined from 355.4 million barrels to 353.6 million barrels, reaching multi-decade lows.

Meanwhile, domestic oil production jumped from 12.2 million bpd to 12.4 million bpd, which was a bearish development for oil markets. Interestinly, oil bulls do not look worried about rising domestic production.

At this point, traders are focused on the headline crude inventory numbers. WTI oil and Brent oil are up by about 1.5% and are trading near session highs. WTI oil is trying to climb above $72.80, while Brent oil is testing the $77.40 level.

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