API Report Bullish For Crude Oil

CRUDE OIL

The cease fire is holding, and crude oil prices are holding their losses of the last two sessions for the most part. August Crude Oil is slightly higher this morning but is confined to the lower end of yesterday’s range. The API report yesterday afternoon was bullish for crude oil and mixed for the products. Reuters reported that API US crude stocks fell 4.23 million barrels for the week ending June 20, versus expectation for -800,000 based on their analyst poll. Gasoline inventories were reportedly up 764,000 barrels versus +400,000 expected, and distillate stocks were down 1.03 million barrels versus up +400,000 expected. The EIA number will be released this morning, and the trade also expects refinery runs to be up 0.5% to 93.7%. The EIA report may carry more weight this morning with the trade in light of the cease fire and with the trade being less obsessed over the threat of a suspension of exports from the Persian Gulf. As of last week,  US EIA crude oil stocks at 420.9 million barrels were down from 457.1 million the previous year and a five year average of 468.9 million. They were the second lowest for this point in the season in five years.

NATURAL GAS

August Natural Gas extended its move lower overnight and fell back below the 200-day moving average. Warmer than normal temperatures across the US should keep cooling demand at near or above normal levels. The 6-10 day forecast shows mostly above normal temperatures across the lower 48, except for some below normal temps in the Southwest and near normal in the Central Plains and Iowa. The 8-14-day has a broad swath of normal from the Plains to the Northeast but still only a limited area of below normal. EU member states have reached an agreement to loosen rules on filling gas storage on concerns the current rules could prevent a buildup of ample supplies ahead of winter. This could be viewed as beneficial for US LNG exports this summer.

PRODUCTS

The API report was negative for gasoline but supportive for crude oil and diesel. Traders may pay attention to the implied gasoline demand number in today’s EIA report to get an indication on how the summer driving season is developing. Last week’s report showed implied gasoline demand for the week ending June 13 was 9.299 million barrels per day vs 9.170 million the previous week and 9.386 million a year ago. Last week’s report also showed  US gasoline stocks at 230.0 million barrels  were the down slightly from 231.2 million the previous year and a five year average of 234.3 million.

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