Crude Finishes Lower, Signs Russia Reducing Shipments

Oil prices were down on Wednesday but held onto most of Tuesday’s gains. Early in the NY session crude was over 1.5% on the previous close but the stronger dollar and lower-than-expected US inventory drawdown drove prices down. The USD index strengthened 0.35%.

• Brent finished down 0.1% to $79.53/bbl after reaching an intraday high of $80.93. It is off its low of $79.17. Resistance is at $82.06. The rally had been driven by signs of lower Russian production with seaborne shipments falling to a 6-month low in the 4 weeks to July 16. Urals oil prices are back above the $60 price cap encouraging buyers to looks elsewhere.
• WTI fell 0.4% and has started the APAC session lower and is at $75.20. After a high on Wednesday of $76.87 it fell to $75.02, with $75 providing support. Resistance is at $78.03. The expiry of the August contract today could increase volatility.
• EIA US crude inventories fell 708k barrels compared to expectations of 2.37mn. Gasoline stocks fell 1.07mn but distillate rose 13k. Refining capacity increased 0.6% last week. Implied gasoline consumption was under 9mbd for a second consecutive week with the 4-week average 4% below the same time in 2019.
• US distillate demand fell to its lowest seasonally since 2009 but stocks are their smallest since 2004 excluding 2022, which may be important heading towards the northern hemisphere winter.