Oil Rebounds From Session Lows As Crude Inventories Drop

Key Insights

• Crude inventories decreased by 9.6 million barrels from the previous week. 
• SPR declined from 350 million barrels to 348.6 million barrels. 
• Domestic oil production remained unchanged at 12.2 million barrels. 

On June 28, EIA released its Weekly Petroleum Status Report. The report showed that crude inventories declined by 9.6 million barrels from the previous week. Analysts expected that crude inventories would drop by 1.75 million barrels.

Total motor gasoline inventories increased by 0.6 million barrels, while distillate fuel inventories grew by 0.1 million barrels. Crude oil imports increased by 418,000 bpd, averaging 6.6 million bpd.

The U.S. continued to sell oil from the Strategic Petroleum Reserve. SPR decreased from 350 million barrels to 348.6 million barrels.

Domestic oil production remained unchanged at 12.2 million bpd. Oil companies are not ready to boost production at current price levels.

WTI oil made an attempt to settle above the $68.50 level after the release of the report. Falling inventories and declining strategic reserves are bullish for oil markets. At the same time, traders remain worried that central banks’ rate hikes will put too much pressure on the world economy and reduce demand for oil.

Meanwhile, Brent oil rebounded towards the $73 level. It should be noted that Brent oil and WTI oil are trading near strong support levels which are located at the yearly lows, so a bullish EIA report can serve as an important positive catalyst for oil markets.

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