The Biggest Hurdle for Oil Gains Today
US crude oil inventories fell 1.5 MMbbls (million barrels) to 481.9 MMbbls in the week ended July 28, 2017, as reported by the EIA (Energy Information Administration) on August 2, 2017. The fall has been just below the halfway mark of the expected fall of 3.2 MMbbls.
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The surplus of crude oil (UCO) (BNO) inventories above the five-year inventory spread could impact oil prices adversely. However, any contraction in the inventories spread could increase bullish bets on oil prices.
In the week ended July 28, 2017, the inventories spread rose 40 basis points compared to the week ended July 21, 2017. US crude oil (USL) active futures fell 0.8% between August 2 and August 8, 2017. On August 2, 2017, the EIA announced the latest oil inventory data.
Will oil inventories fall?
The market expected a 2.6 MMbbls draw in crude oil inventories for the week ended August 4, 2017. For the same week, the API reported a fall of 7.8 MMbbls. The EIA will report crude oil inventory data on August 9, 2017.
Any changes in the inventories spread could be important for oil prices. And we have to remember that oil prices are important drivers for broader market indexes like the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA).