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James Hyerczyk
Crude Oil
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher early Wednesday after the American Petroleum Institute (API) reported a crude draw of 3.16 million barrels of United States crude oil inventories for the week-ending July 21, compared to analyst expectations for a smaller draw in crude oil inventories of 2.331 million barrels.

At 0833 GMT, September WTI crude oil futures are trading $68.64, up $0.12 or 0.16%. September Brent crude oil is at $73.98, up $0.54 or +0.75%.

The API also reported a huge draw in gasoline inventories for the week-ending July 21. The report showed a draw of 4.87 million barrels, well above the expected draw of 713,000 barrels.

Distillate inventories were also down the week-ending July 21. Inventories dropped 1.32 million barrels. This was well off the forecast calling for a build of 207,000 barrels. Finally, inventories at the Cushing, Oklahoma site fell by 808,000 barrels.

In other news, reports that China will increase infrastructure spending also helped reduce concerns that U.S.-China trade tensions will dent the country’s demand for oil.

Forecast

The bullish gasoline figure for the week-ending July 13 in last week’s U.S. Energy Information Administration’s weekly inventories report helped put in a bottom and may have created the current upside momentum in the market.

Wednesday’s gasoline number may be the catalyst that changes the trend to up with a drive through $69.31. All eyes will be focused on this figure at 1430 GMT when the EIA releases its weekly inventories report for the week-ending July 20. This is largely because of the bullish API number released late Tuesday.

The market will be further boosted if the EIA crude inventories number shows a larger draw than the minus 2.6 million barrel forecast.

In the absence of any fresh news regarding OPEC-led supply, or new supply disruptions, the main market driver will be the EIA report so prepare for higher-than-expected volatility.

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