A large draw in total U.S. crude oil stocks reported by the API late yesterday has resulted in a light round of short covering in a market that remains oversold. As of this morning the crude oil market is still in positive territory but well off of the overnight highs hit after the API data release as the industry awaits the more widely followed EIA oil inventory snapshot.
Oil prices jumped more than 4.5 %on Thursday after a rally in equity markets and an unexpected fall in U.S. crude inventories, but worries over the Chinese economy and a global oil glut kept the outlook uncertain.
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.