Crude Up Sharply Following Third Straight US Inventory Drawdown

Oil prices rose strongly on Wednesday driven by the EIA reporting another large US crude inventory drawdown. The weaker US dollar also supported oil with comments from Trump that the dollar is too strong driving the USD index down 0.3%.

• WTI rose 2.9% to $83.10/bbl and has started today slightly higher at $83.17. It is now up 1.9% this month. This move may have broken the recent corrective cycle. Initial support is at $80.10, 50-day EMA, while resistance is at $84.52, July 5 high.
• Brent is up 1.7% to $85.19/bbl to be up slightly this month. The trend condition remains bullish with support at $82.31 and resistance $87.95.
• EIA reported US crude inventories fell 4.87mn last week. This is the third straight weekly drawdown worth 20.47mn barrels in total and bringing the level to its lowest since February. But refined products gasoline and distillate saw large stock builds of 3.33mn and 3.45mn respectively. Gasoline inventories had declined the previous two week. Refinery utilization fell 1.7pp to 93.7%.
• US imports of Canadian oil rose to a record high of 4.42mbd last week with Saudi Arabia, the second largest foreign source, at only 394kbd. Wildfires in the oil sands region of Canada have resulted in reduced production though. They are currently threatening over 400kbd, about 10% of Alberta’s oil output, according to Bloomberg.