Crude Stores Fall Again
Despite trading lower over the week, crude oil found some demand midweek. This came in response to the latest report from the Energy Information Administration.
The EIA reported that in the week ending September 25th US crude inventories fell by a further 2 million barrels. This marks the third straight week of inventory declines and takes the overall level of crude stockpiles back down to 492.4 million barrels.
This latest decline in inventory levels means that US crude stores have only been in surplus for two weeks out of the last 12. This reflects the better demand seen as the US continues to recover from the nationwide lockdown in place during the height of the pandemic.
Gasoline & Distillate Stockpiles Lower
The data also showed that gasoline inventories were lower by 0.7 million barrels over the week taking the overall inventory level back down to just 1% above the five-year average for this time of year.
Distillate stockpiles were also lover over the week falling by a further 3.2 million barrels. This takes the total inventories level back down to 21% above the five-year seasonal average.
Net Imports Down
Elsewhere, the report showed that net US crude imports averaged 5.1 million barrels per day over the week. This is down by 45000 barrels per day on the prior week. Looking back across the last four weeks now, crude oil imports have averaged 5.2 million barrels per day. This is down around 21% on the same period a week prior.
Demand Still Off Pre-Virus Levels
Looking at the demand levels in the market, the total products supplied figure (used as a proxy to gauge fuel demand) averaged 17.9 million barrels per day, down by around 14% on the same period last year.
Gasoline products supplied, meanwhile, averaged 8.5 million barrels per day, down by 8.9% on the same period last year.
Finally, distillate products supplied averaged 3.5 million barrels per day, down 8.9% on the same four-week period a year prior.
COVID Fears Still Dominating Attention
In terms of the fundamental backdrop, the main issue for the crude market continues to be that of the path of the pandemic. With a growing number of countries citing rising infection rates, the risk of fresh lockdown measures is increasing.
Airline restrictions have also started to come back into focus with more airlines starting to reduce their services again, raising concerns over the demand outlook for crude.
Crude Continues Lower in Bearish Channel
Crude oil prices continue to trade lower within the bearish channel which has formed from the correction lower from 44 level highs.
Price is currently capped by the channel top and the 50% retracement from 2020 highs. While below here, price is vulnerable to a further dip lower towards the 33.17 level.