Crude oil prices
August WTI oil futures contracts fell 0.7% in early morning trading on July 18. Brent and WTI crude oil futures rose ~0.5% and ~0.03%, respectively, on July 17.
Bullish drivers for crude oil
- US crude oil inventories were expected to decline by 3.5 MMbbls (million barrels) last week.
- Two of the four crude oil upgraders in Venezuela are expected to undergo maintenance in the next few weeks. These units have a combined capacity of 700,000 bpd (barrels per day). The units are used to prepare extra-heavy oil for export. Routine maintenance could cause a supply outage.
- On July 16, the oil worker strike escalated in Norway. More oil workers joined the strike due to the conflict about a higher pay and pension rights. The strike started on July 10. If the strike lasts longer than one month, it could cause a supply outage.
- On July 17, NOC declared force majeure on oil exports from the Zawiya oil terminal in Libya. The output at the Sharara oilfield declined to 125,000 bpd due to militant attacks.
- US motorists traveled 0.8% more miles to 286.2 billion vehicle miles in May compared to last year, which could drive the gasoline demand.
- There’s a supply outage in Canada.
Bearish drivers for crude oil
Active WTI crude oil prices hit $74.15 per barrel on June 29—the highest level since November 2014. Since then, the prices have fallen 8.2%.
- The US might consider sanction waivers for some countries importing crude oil from Iran even after November 4. France, Germany, and Britain were exploring ways to keep the Iranian nuclear deal alive.
- The US, Saudi Arabia, and Russia’s oil output could increase in the coming months.
- Chinese crude oil imports hit a six-month low at 8.36 MMbpd (million bpd) in June.
- The rising trade war between the US and China could impact global demand and reduce US crude oil exports.
- President Trump plans to use the country’s strategic petroleum reserve, which is at 660 million barrels.
- The U.S. Energy Information Administration expects the US crude oil output in the seven shale regions to rise by 143,000 bpd to a record high of 7.47 MMbpd in August.
The Energy Select Sector SPDR ETF (XLE) fell ~0.4% on July 17. XLE contains oil and gas producers and other energy-related service companies. Anadarko Petroleum (APC), Apache (APA), Noble Energy (NBL), and Williams Companies (WMB) fell 2%, 1.6%, 1.2%, and 1%, respectively, on July 17. These stocks were the top percentage losses in XLE’s holdings on the same day. These stocks account for 6.8% of XLE’s holdings.
Next, we’ll discuss the American Petroleum Institute’s US crude oil, gasoline, and distillate inventories.