Crude oil prices were trading like the damage is done. In other words, the Greek crisis charade has already done damage to the European economy and the oil demand outlook. While Greek Prime minister Alexis Tsipras decides to go down in flames calling for a no vote and bring Greece down with him the market outlook is cloudy. So instead of oil focusing on better than expected oil demand the market once again started to fret about supply.
While the Energy Information Administration (EIA) report seemed to shock people with a supply increase, they really should not have been surprised. The Energy Report told you that last week's sharp drop in imports was due to tropical storm bill would recover this week. The EIA reported that U.S. crude oil imports averaged over 7.5 million barrels per day last week, up by a whopping 748,000 barrels per day last week. Even with that import surge, oil supplies rose only 2.4 million barrels.
The reason was strong U.S. demand. In every category, demand is blowing away demand from a year ago. The EIA said that motor gasoline product supplied averaged over 9.5 million barrels per day, up by a smoking 6.4% from the same period last year. On top of that they are predicting a record weekend for Fourth of July driving demand. Distillate fuel product supplied averaged over 3.9 million barrels per day during the last four weeks, up by a whopping 4.1% from the same period last year.
These were the numbers the markets were focusing before Greece. Even the stock market turmoil in China was not a concern because the Chinese government signaled by a cut in interest rate it would do what it takes to keep the Chinese economy afloat and keep their oil appetite strong. Yet, any increase in supply now looks bearish because the optimism about demand exceeding supply gains is being doused by Greece and its drive toward financial self-destruction.