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EIA Reports 4th Consecutive Inventories Decline

Weekly Crude Oil Inventories Report

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Crude Inventories Fall Again

Crude oil prices have remained buoyant this week as the latest data from the Energy Information Administration announced a further fall in US crude stockpiles.

The EIA confirmed that in the week ending August 14th, US crude levels fell by a further 1.6 million barrels. This took the total inventory level to 512.5 million barrels.

Despite the fall, which marks the fourth consecutive weekly decline in US crude levels, the move was still less than the 2.6 million-barrel decline forecast by the market.

Nevertheless, news of a continued drawdown to headline inventory levels has helped encourage bullish sentiment.

Gasoline Stores Decline

The data also showed that US gasoline stores were lower by 3.3 million barrels to 243.8 million barrels in total. This latest decrease was well beyond the 1.1 million drop the market was looking for.

Despite the fall in headline crude inventories and gasoline inventories, the EIA reported an increase in distillate stockpiles.

The category, which includes diesel and heating oil, was higher by 152k barrels. This was in stark contrast to the expectations for a 557k barrel drop.

In total now, distillate stockpiles are around 177 million barrels, just below the 38-year highs marked last month.

Imports Rise, Demand Falls

Elsewhere, the data showed that refinery crude runs were lower by 171k barrels per day. Refinery utilization rates decreased by 0.1%.

Net US crude imports rose by 1.1 million barrels per day to 3.6 million barrels per day. This marks a return of import demand which has been somewhat subdued recently.

In terms of demand, the report showed that total products supplied in the US, the reading which is used as a proxy to gauge demand, averaged 18.4 million barrels per day over the last four weeks.

This reading marks a 14.3% contraction on the same period last year. Gasoline products supplied averaged 87 million barrels per day over the last four weeks. This marks a 9.9% contraction on the same period last year.

Oil prices have remained well supported over recent weeks, despite the lack of upside momentum. Price has retained a bid tone with the US dollar remaining under selling pressure and equities sitting at highs.

The risk backdrop remains supportive, despite concerns over growing virus numbers around the globe.

With governments looking reluctant to return to nationwide lockdowns, traders seem to be taking an optimistic approach to the outlook for oil demand.

Crude Continues to Trade Lightly

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Crude oil prices have continued to hold around the 42.43 level this week. Price has been trading roughly around this level over the last two months now, having drifted above the 61.8% retracement from the 2020 highs.

Momentum has firmly contracted recently though. For now, focus remains on higher prices in the near term with the 78.6% retracement around 52, the next resistance level to note.

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