Crude oil rebounded in the early morning hours
After falling for two consecutive trading days in this week amid oversupply concerns, crude oil prices rebounded after the inventory data released. At 6:45 AM EST on August 3, the West Texas Intermediate crude oil futures contract for September delivery was trading at $39.74 per barrel—a gain of ~0.58%. Brent crude for October contract was trading at $42.02 per barrel—a gain of ~0.53%.
API reported a drawdown in inventories
On August 2, the API (American Petroleum Institute) reported a decline in crude oil inventories—very close to the market’s expectations. According to the inventory data released by the API, crude oil inventories fell by 1.3 MMbbls (million barrels) in the week ending on July 29. This is close to the market’s expectations of a decline by 1.36 MMbbls. The inventory data supported crude oil prices in the early morning hours on August 3.
The market is looking forward to the crude oil inventory report by the U.S. Energy Information Administration. It’s scheduled to release at 10:30 AM EST today.
Sentiment is still weaker in the market
Even though the draw-down in the inventory levels was reported, the fact that the inventory levels are high for this time of year is weighing on crude oil prices and capping the gains. Read Crude Oil in a Bear Market, High OPEC Production Partly Blamed for an in-depth analysis of the weak sentiment in the crude oil market.
On August 2, major crude oil producers Carrizo Oil & Gas (CRZO), Canadian Natural Resources (CNQ), British Petroleum (BP), and Total S.A. (TOT) gained 2.2%, 1.8%, 0.81%, and 0.17%. The SPDR S&P Oil & Gas Exploration and Production ETF (XOP) gained 0.67% and the PowerShares DB Oil ETF (DBO) fell 1.2%.