Oil Traders Expect Large Inventory Draw in Q3: Reuters

Crude markets have shown an increasing disconnect between rising spot prices and calendar spreads against increasing inventories, according to Reuters’ Brian Kemp.

• Nonetheless, traders appear to be anticipating a much tighter supply situation that would lay the foundations for higher prices and spreads in the coming months.
• US crude inventories are up 7m bbl over the nine weeks to June 21, compared to an average draw of 10m bbl over this period. Nearly all the rise has come from the USGC.
• Analysts expect a large deficit in Q3, which would cut inventories sharply.
• However, traders have expected a rapid fall in inventories and have repeatedly pushed back the timeline.
• These expectations are based on expectations of a strong summer driving season, although US gasoline inventories have been building rather than depleting.