EIA Oil Preview: Crude Draw Expected

EIA Oil Inventory Preview: The EIA weekly petroleum status report is scheduled for release at 11:00 EDT (16:00 BST) today. The release is a day delayed due to the US holiday earlier this week.

• Crude inventories are expected to draw by -1.15mbbls for the week to 1^st July. Gasoline is expected to show a draw of -0.69mbbls and distillates a build of +1.0mbbls.
• Last week’s data showed crude inventories are just below the 5-year range but stocks at Cushing are less than half the average for this time of year. High exports and low imports have kept stocks below normal, and that trend is likely to continue. Slowly increasing US production may be helping to ease the tight market slightly. US production increased above 12mbbls for the first time since April 2020 having hovered at or just below that level for much of this year so far. Production peaked in March 2020 at 13.1mbbls.
• Crude exports remain at the top end of the 5-year range with Brent trading well above WTI and encouraging supply to Europe. The WTI-Brent spread averaged -6.58$/bbl last week compared to -5.4$/bbl the week before.
• Refining activity has gradually been increasing as high margins encourage high utilization. Cracks spreads have been gradually falling over the last few weeks due to economic concerns but are still approximately double levels seen at the start of the year. Refinery utilization is therefore still likely to maintain high levels with an increase of 0.12% expected in the data today.
• Gasoline and diesel implied demand data has started to show signs that high pump prices are having an impact. The gasoline demand four week rolling average has fallen to the lowest seasonal level since 2014, except for 2020. A further drop in demand data could add to the downward pressure on cracks spreads.
• The API data released last night showed a build in crude of +3.8mbbls, a build in Cushing of 0.5mbbls, a draw in gasoline of 1.8mbbls and a build in distillates of -0.6mbbls.