Today, the EIA will release their monthly Short Term Energy Outlook Report (STEO). The market will be very focused on the EIA’s new projection for U.S. crude production now that they are employing a new survey method for crude production.
Crude oil prices are modestly higher for the second day in a row after a mildly bullish API oil inventory report release late yesterday. The gains in oil are primarily driven by short covering after a significant decline in prices that began in mid-June.
Crude prices are drifting lower ahead of this morning’s Energy Information Administration (EIA) oil inventory report after the API reported a modest draw in crude, but a significant build in distillate fuel.
Yesterday’s expiration of the August Nymex WTI contract was mostly uneventful with the market trading in a relatively tight trading range. So far this morning the market is on the defensive after the API reporting a surprise build in total U.S. crude oil stocks.
Crude oil traded in a "sell the rumor, buy the fact" pattern yesterday. Immediately after the announcement of the Iranian nuclear deal was announced, oil prices declined about $1 per barrel for a short period only to enter into a recovery rally for the rest of the trading session. When the dust settled, the oil complex ended Tuesday’s trading session in positive territory.
Crude oil prices have been in a selling mode for most of this week on a combination of the evolving situation in Greece, a sell-off in Chinese equities and the growing possibility of an Iranian nuclear deal. All three areas can potentially lead to the current oversupply of oil growing even further.
U.S. crude futures tumbled 3 percent to lead the oil complex down for a second straight day on Tuesday as an investor flight to safe havens continued from worries of a Greece exit from the euro zone and China's deepening stock market losses.