DOE expected to report smaller decline in US crude oil stocks

Oil prices performed differently yesterday: whereas Brent stagnated at $48.5 per barrel, WTI gained by nearly 2% to reach $42.5 per barrel. The price increase in WTI is nothing more than the proverbial drop in the ocean in view of its 30% decline since the beginning of July, says Commerzbank. There is still a lack of fundamental support to allow any more lasting price recovery, and even the surprisingly sharp decrease in US crude oil stocks by 2.3 million barrels reported for last week by the API after close of trading yesterday can do nothing to change this. 

The US Department of Energy will be publishing the official inventory data this afternoon. Attention is likely to be focused in this context on crude oil processing which has been at a record level in recent weeks and as such was largely responsible for the decrease in crude oil stocks. All things being equal, the outage of a crude distillation unit in the US Midwest should reduce refinery demand by 240,000 barrels per day, which would drive demand for the week as a whole down by 1.7 million barrels - the inventory reduction should be smaller by this amount, added Commerzbank.

Assuming that other parameters such as imports and production remain unchanged, crude oil stocks will not have fallen further last week. This could meet with disappointment on the market, especially since the high-demand summer driving season is drawing to a close, meaning that rising crude oil stocks can be expected in just a few weeks' time, states Commerzbank.