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U.S. crude supplies poised to post longest stretch of weekly declines in 18 months

24 July 2019 10:14 (UTC +04:00)

Analysts expect the Energy Information Administration on Wednesday to report a fall in supplies of U.S. crude, stretching their declines to a sixth consecutive week—the longest streak in 18 months, APA reports citing Marketwatch.

The government report due Wednesday morning is likely to show that crude stocks declined by 4.4 million barrels for the week ended July 19, according to analysts polled by S&P Global Platts.

“Another draw in oil stocks, especially one larger than estimated, would be an incrementally bullish development for this currently sideways energy market,” said Tyler Richey, co-editor at Sevens Report Research.

A sixth consecutive crude-supply fall would mark the longest stretch of declines since the 10-week fall from the week ended Nov. 17, 2017 to Jan. 19, 2018, according to an analysis of EIA data provided by Richey.

Among the petroleum products, gasoline stockpiles were seen 1.1 million barrels lower for last week, but distillate supplies, which include heating oil, were forecast to climb by 1.7 million barrels, the survey showed.

The expected fall in crude supplies follows output declines tied to Hurricane Barry, which passed through the Gulf of Mexico earlier this month.

The hurricane resulted in a peak reduction of about 1.3 million barrels a day, or 70%, in Gulf oil production on July 13, according to the Bureau of Safety and Environmental Enforcement. Output had gradually recovered to a loss of just 62,670 barrels of oil per day on July 20.

“Any crude inventory decline, however, will likely be tempered by an expected increase in crude imports following the hurricane,” said Jeff Mower, director of Americas oil news at S&P Global Platts. Citing data S&P Global Platts Analytics, he said crude imports may have climbed to 7.2 million barrels a day last week from 6.83 million barrels a day the prior week, as some delayed shipments arrive.

So far, expectations for the decrease in crude stockpiles have failed to offer much support for oil prices.

On Tuesday, September West Texas Intermediate crude CLU19, +0.44% rose 55 cents, or 1%, to settle at $56.77 a barrel on the New York Mercantile Exchange. The contract trades about 2.9% lower month to date.

If there’s another decline in crude stocks reported Wednesday, crude-oil prices “should move up prices in the short-run, unless we see news of a breakdown in U.S.-China trade talks which would outweigh the news of a decline in the weekly report,” said James Hatzigiannis, senior commodities associate at Long Leaf Trading Group.

“Demand worries are still surfacing, but have calmed down somewhat because of news of China and U.S. officials meeting for trade negotiations [some time] next week,” he said.

The oil market, however, seems to be "most keenly focused on Iran,” said Richey.