U.S. benchmark West Texas Intermediate (WTI) is up over 2.9%, with Brent up solely half that on the day, after the EIA reported a larger-than-expected draw on U.S. crude stockpiles and a weakening U.S. greenback. U.S. crude oil inventories have drawn down greater than 20 million barrels over the past three weeks as driving season props up demand.

On Wednesday at 5:16 p.m. ET, Brent crude was buying and selling up 1.72% at $85.17, up $1.44 on the day, whereas WTI was buying and selling up 2.90% at $83.10, for a acquire of $2.34 on the day. The value of the OPEC basket of 12 crudes was at $84.44.

The EIA reported a listing draw of 4.9 million barrels for the week to July 12, on prime of a 3.4-million-barrel draw for the earlier week, with U.S. crude inventories now round 5% decrease than the five-year common for this time of yr. 

Each the weekly stock report and the flagging greenback beat out persevering with destructive sentiment on financial development considerations in China, which has curtailed imports, weighing on general world crude oil demand. China’s Q2 financial development clocked in at 4.7%–its slowest because the first quarter of final yr. 

A flagging U.S. greenback usually boosts oil demand.  

Whereas each the Brent crude and WTI crude benchmarks have seen beneficial properties over the previous week, WTI has seen extra aggressive beneficial properties. Brent’s premium to WTI is now right down to $2.12. 

The market is now in a state of backwardation, with entrance month contracts buying and selling at a major premium to these additional out. Premiums for the first-month contract to the six-month contract are actually at $3.41 in one of many clearest indications that the market is viewing crude as tightly provided for immediate deliveries.

U.S. crude oil exports have been using some good tailwinds from Saudi Arabia’s July export cuts thus far, seemingly additional decreasing U.S. crude stock this month. 

Bloomberg reported that Saudi Arabia’s abroad oil shipments dropped to a 10-month low in June, sitting at round 168 million bpd for the month (~5.6 million bpd). In line with Bloomberg, this determine is just 250,000 greater than the bottom level throughout the pandemic.

Saudi Arabia isn’t the one main OPEC+ nation that’s dialing again its crude exports this summer time, In line with HFI Analysis, Russian crude exports have fallen from 5 million bpd in June to beneath 4 million bpd thus far in July.

Russia is not fucking round huh? pic.twitter.com/yNH48SZfuj

— HFI Analysis (@HFI_Research) July 17, 2024

On the identical time, U.S. crude exports to Europe have additionally dropped off, hitting a two-year low in June, Reuters reported, down 14% from Might, largely because of the narrowing Brent-WTI unfold. 

By Julianne Geiger for Oilprice.com

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