Crude Oil Prices Erase Early Gains on Bearish EIA Inventory Report

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Crude oil prices erased early gains and turned lower after a bearish weekly EIA inventory report. August WTI crude fell 0.54 to settle down 0.68 percent, while August RBOB gasoline rose 0.0206, or 0.64 percent. EIA crude inventories declined by 1.69 million barrels, a smaller draw than the expected 2.1 million barrels, and gasoline supplies fell by 1.5 million barrels, missing the 2.0 million barrel draw forecast. Distillate stockpiles unexpectedly rose by 4.56 million barrels against expectations of a 1.85 million barrel decline, and crude supplies at Cushing increased by 430,000 barrels. Prices had initially moved higher after the US launched airstrikes against Iran for a fifth straight day, with President Trump pledging to intensify the bombardment until Iran stops attacking ships in the Strait of Hormuz and agrees to open the waterway, while Iran responded with missile and drone attacks against Kuwait. The International Maritime Organization warned that it is too dangerous to cross the strait, and visible transit has fallen sharply. Support also came from Ukraine intensifying drone attacks on Russian oil infrastructure, with Russian crude production falling to 8.928 million barrels per day in June, the lowest in two and a half years, and crude-processing rates averaging 3.91 million barrels per day in the first ten days of July, the lowest in 21 years. However, stronger Russian crude exports, with the four-week average rising to 4.13 million barrels per day through June 28, the highest since the 2022 invasion, added to global supplies. The International Energy Agency warned on June 17 that the Iran war’s impact on global oil demand will be deeper than previously anticipated, with world oil consumption declining by 1.1 million barrels per day this year, a larger drop than the previous estimate of 420,000 barrels per day. The Department of Energy raised its US 2026 crude production estimate to 13.78 million barrels per day from 13.72 million. OPEC delegates said on May 14 that the cartel aims to continue a series of oil quota increases, completing the return of halted production by the end of September, and OPEC plus said it will boost output by 188,000 barrels per day in August. US crude oil production in the week ending July 10 was unchanged at 13.861 million barrels per day, just below the record high of 13.862 million.

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