Crude oil prices rise from lows
After falling more than 3.5% on Wednesday, July 13, crude oil prices started recovering in the early morning hours of July 14. At 6:05 AM EDT on July 14, WTI (West Texas Intermediate) crude oil futures contracts were trading at $45.36 per barrel, a gain of ~1.4%, whereas Brent crude oil was trading at $46.88 per barrel, a surge of ~1.5%.
Persistent supply glut despite healthy demand
According to the latest figures released by the IEA (International Energy Administration), the demand forecast for crude oil in 2016 and 2017 was revised upward by 0.1 MMbbls (million barrels) to 1.4 MMbbls and 1.3 MMbbls, respectively. According to the IEA, the healthy forecast is due to demand from the biggest consumers, such as China and India. Read India’s Crude Oil Demand Growth Is at Its Highest in 10 Years to learn more about demand growth in India. According to the global oil market output report released by the IEA, the supply glut in the crude oil market may persist much longer despite healthy demand because of the increase in crude oil inventories.
Disappointing crude oil inventory data
In addition to the IEA’s report, the recently released crude oil inventory data disappointed the Market and resulted in the weakness in prices. According to the report released by the EIA (U.S. Energy Information Administration), crude oil inventories declined by 2.6 million barrels in the week ending July 8. This was less than the Market’s expectation of a drawdown of 3.0 million barrels. This resulted in the drop of crude oil prices on Wednesday, July 13. On July 13, major crude oil producers Carrizo Oil & Gas (CRZO), British Petroleum (BP), and Total SA (TOT) fell by ~2.9%, ~0.95%, and ~0.23%, respectively, whereas Canadian Natural Resources (CNQ) rose by 0.03%. The SPDR S&P Oil & Gas Exploration and Production ETF (XOP) and the PowerShares DB Oil Fund (DBO) fell by ~2.1% and ~3.4%, respectively.
The next article in this series discusses the performance of metals in the early morning hours of July 14.