So far for the week the spot WI contract is still lower by about $0.65/bbl while the spot Brent contract is lower by about $0.50/bbl. The market continues to trade in a choppy sideways pattern with the bias slightly to the downside. Today’s EIA inventory report will likely be a market mover if the data is in sync with bearish API data.
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.
Today, the EIA will release their monthly Short Term Energy Outlook Report (STEO). The market will be very focused on the EIA’s new projection for U.S. crude production now that they are employing a new survey method for crude production.
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.
Crude oil traded in a "sell the rumor, buy the fact" pattern yesterday. Immediately after the announcement of the Iranian nuclear deal was announced, oil prices declined about $1 per barrel for a short period only to enter into a recovery rally for the rest of the trading session. When the dust settled, the oil complex ended Tuesday’s trading session in positive territory.