The IEA indicated in its report that the long-awaited rebalancing of the global oil market has begun but is likely to last through 2016 as the supply overhang is expected to persist through 2016. Overall it was a supportive report but one that is still projecting supply to outstrip demand through 2016.
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.