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James Hyerczyk
WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Thursday after an industry report showed U.S. crude stockpiles unexpectedly rose last week. This bad news came on top of a weak demand outlook that remains clouded by rising coronavirus cases around the world. Other bearish factors include reports that China’s crude oil imports will begin to level off, and the start of U.S. refinery maintenance season, which means lower demand.

At 08:06 GMT, December WTI crude oil futures are trading $38.29, down $0.58 or -1.49% and December Brent crude oil futures are at $40.79, down $0.55 or -1.33%.

American Petroleum Institute Weekly Inventories Report

The API reported on Tuesday a build in crude oil inventories of 2.970 million barrels for the week-ending September 4. Analysts were looking for an inventory draw of 1.335 million barrels.

The API also reported a large draw in gasoline inventories of 6.892 million barrels of gasoline for the week ending September 4 – compared to last week’s 5.761-million-barrel draw. Analysts had expected a much smaller 2.384-million barrel draw for the week.

Distillate inventories were up by 2.293 million barrels for the week, compared to last week’s 1.424-million-barrel draw, while Cushing inventory rose by 2.608 million barrels.

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The Week So Far…

The week started on a bearish note with Saudi Arabia announcing its state oil company Aramco cut the October official selling prices for its Arab light oil, a sign of softening demand.

Meanwhile, the Labor Day weekend marked the end of the U.S. summer driving season when gasoline demand is greatest, compounding both a supply and demand problem in the market. With refiners dropping run rates in the coming weeks as turnaround season begins, crude storage is going to climb even higher than near historic highs.

Daily Forecast

As long as the main trend is down and the fundamentals remain bearish, investors are likely to sell rallies. Wednesday’s short-term reversal was impressive on the charts, but without a support base, it’s going to be hard to support a prolonged rally.

At 15:00, the U.S. Energy Information Administration (EIA) will release its weekly inventories report. The EIA data is expected to show crude inventories fell by 500,000 barrels the week-ending September 4, according to analysts polled by S&P Global Platts. They also forecast a supply decline of 2.5 million barrels for gasoline and an inventory increase of 300,000 barrels in distillates.

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

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