Oil futures: Crude prices higher after US stocks decline, record exports

17 Aug 2022

Quantum Commodity Intelligence - Crude oil futures Wednesday rallied after a bullish data set from the EIA underscored the earlier report from the API, revealing steeper-than-expected draws in US oil stocks.

Front-month October ICE Brent futures were trading at $93.32/b (1930 GMT), compared to an initial post-EIA release high of $94.48/b and Tuesday's settle of $92.34/b.

At the same time, September NYMEX WTI was trading $87.74/b, versus Tuesday's settle of $86.53/b, while the Oct22 contract was trading at $87.32/b.

The Energy Information Administration reported US crude stocks last week dropped 7.1 million barrels, while gasoline stocks retreated by 4.6 million bpd.

In addition, US crude exports were estimated at a record 5 million barrels and US implied oil demand (product supplied) rose by 1.747 million bpd to 21.221 million bpd last week.

The American Petroleum Institute reported late Tuesday that US commercial crude inventories fell by 448,000 barrels last week versus expectations of a slightly smaller drop, while gasoline stocks were down by 4.48 barrels and distillate inventories showed a draw of 250,000 barrels.

Polls had expected gasoline stockpiles to fall by 1-1.5 million barrels while also calling for an increase in distillate inventories.

Oil markets remain fragile amid concerns that China's growth could slow further, along with the possibility of sanctions being lifted on Iranian crude as negotiators near a potential revival of the nuclear deal, known as the JCPOA.

Crude oil throughput at China's refineries was down in July compared to June as Covid-related lockdowns persisted and worries started to emerge over the longer-term impact of the policy on economic productivity.


According to reports, Iran's parliament was holding a closed session on Wednesday to discuss the nuclear deal.

"After 18 months of negotiations, progress has been made in reviving the Iran nuclear deal.​ We've been here before and have seen talks fall apart.​ What is a little different this time is that it seems the Iranians are willing to discuss the terms," said Ed Moya, senior market analyst at brokerage Oanda, adding if the Iran nuclear deal is revived, it could send oil prices down to the low $80s. ​

Both the EU and US are reviewing Iran's response to the 'final' text, with Tehran said to have flagged concerns over several conditions and called for more flexibility.

US investment bank Goldman Sachs sees an immediate deal as unlikely as Iran continues to find buyers for its crude, primarily Chinese refiners.

"Our view continues to be that a deal is still unlikely in the short-term, with a stalemate mutually beneficial for both sides wanting to avoid sanctions (Iran), higher oil prices (US), and political backlash (US)," said the investment bank.

Meanwhile, due to "resilient" Russian oil supplies and a potential supply surplus in the near term, Barclays has lowered its crude outlook by $8/b for 2022 and 2023.

The UK bank cut its Brent outlook to $103/b for both years, while WTI was revised downwards to $99/b.