Crude oil recovered in the early morning
After falling on Thursday, June 21, crude oil prices recovered in the early morning hours on July 22. At 6:45 AM EST on July 22, the West Texas Intermediate crude oil futures contract for September delivery was trading at $44.8 per barrel—a gain of ~0.11%. Brent crude was trading at $46.37 per barrel—an increase of ~0.43%.
Higher crude inventories weigh on market
According to the EIA (U.S. Energy Information Administration), US crude oil production has been falling, but the inventory levels are high. According to the weekly inventory data released by the EIA, the crude oil inventories reached 519.5 MMbbls (million barrels)—high for this time of the year. As a result, even though the inventories fell by 2.34 MMbbls in the last week— which was better than the market’s expectation of a drawdown of 2.1 MMbbls—the sentiment is still weaker in the crude oil market due to high inventory levels.
Focus shifted to oil rig count data
Crude oil started this week on a weaker note—it fell in the first two trading days. Even though crude oil gained after the drawdown in weekly crude oil inventories, the sentiment weakened because the inventory levels are high. The market is looking forward to the oil rig count data released by Baker Hughes—scheduled to released on July 22. According to the data released by the Baker Hughes last week, the oil rig count rose by six to 357 by recording an increase for the sixth time in the last seven weeks. This triggered concerns about the chances of an increase in domestic crude oil production amid the supply glut. It weighed on the crude oil sentiment.
On July 21, major crude oil producers Carrizo Oil & Gas (CRZO), Canadian Natural Resources (CNQ), Total S.A. (TOT), and British Petroleum (BP) fell 2.9%, 1.5%, 0.44%, and 0.33%. The SPDR S&P Oil & Gas Exploration and Production ETF (XOP) and the PowerShares DB Oil ETF (DBO) fell 1.7% and 2.3%.