Crude oil responds to bullish EIA stock report

Crude oil continues to grind higher in response to news flows, which remain overwhelmingly supportive. Worries about growth and future demand for crude oil remain just worries at this stage with the market instead responding, albeit at a relatively slow pace, to the continued tightening on the supply side in response to ongoing production cuts from the Opec+ group of producers as well as another slump from a blacked-out Venezuela.

The Weekly Petroleum Status Report released one hour earlier (in Europe) due to beginning of US summer time added another layer of support after crude oil and gasoline stocks both dropped by more than expected. In addition, crude oil production from the Lower 48 states – primarily shale – was adjusted lower by 100,000 barrels/day. Some of the drop in US oil stocks was probably due to a timing effect following last week’s massive 7 million barrel increase. Overall, however, it is still positive given the current lull in refinery demand as the maintenance season draws to a close.