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Vladimir Zernov
Crude Oil

Oil Video 30.09.20.


Crude Inventories Declined By 2 Million Barrels

Yesterday, API Crude Oil Stock Change report showed that crude inventories declined by 831,000 barrels.

Today, EIA Weekly Petroleum Status Report confirmed the downside trend in inventories, indicating that crude inventories declined by 2 million barrels.

Not surprisingly, this development provided material support to oil prices which have recently found themselves under pressure on fears about the pace of oil demand recovery.

According to EIA, crude inventories are about 13% higher than the five-year average for this time of the year so there is still plenty of work to do in order to bring inventories back to comfortable levels. When this happens, oil prices will have much more room for upside.

Crude oil imports were roughly unchanged compared to levels seen in the previous week so they had no material impact on crude inventories.

Gasoline inventories increased by 0.7 million barrels while distillate fuel inventories decreased by 3.2 million barrels.

In general, the inventory picture remains bullish for oil. Inventories continue to decline which shows that there are no additional problems with demand for oil.

That said, the potential second wave of coronavirus will likely remain a major source of worry for oil traders during the flu season so oil may need additional catalysts to get back to August highs.

U.S. Domestic Oil Production Remains Flat At 10.7 Million Barrels Per Day

This Monday, we discussed the recent rebound in the number of U.S. rigs drilling for oil which increased from 179 to 183.

For now, the rebound in the number of drilling rigs had no impact on U.S. domestic oil production. EIA reported that U.S. domestic oil production was flat at 10.7 million barrels per day (bpd) as the industry remained under some pressure after hurricanes.

It remains to be seen whether U.S. oil production will be able to quickly get back above 11 million bpd as September was a challenging month for the oil market and some producers may have decided to wait for more clarity on future prices before increasing production.

If the U.S. production starts to increase again, the oil market will be put to a real test since inventories may reverse their recent decline and start to rise again.

For a look at all of today’s economic events, check out our economic calendar.

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