Despite a significant drop of 3.8 million barrels in crude inventories, as reported by the EIA on June 22, WTI oil experienced a surprising decline below the $70 mark. Analysts had anticipated a slight increase of 0.33 million barrels, making this unexpected turn of events noteworthy.
While gasoline inventories saw moderate growth of 0.5 million barrels, distillate fuel inventories also rose by 0.4 million barrels. Notably, crude oil imports decreased by 220,000 bps, averaging 6.2 million bpd compared to the previous week’s figures.
Additionally, the Strategic Petroleum Reserve (SPR) continued its oil sales, resulting in a decrease from 351.7 million barrels to 350 million barrels.
Despite these bullish factors, domestic oil production fell from 12.4 million bpd to 12.2 million bpd. The stability within the range of 12.2 million to 12.4 million bpd raises questions about the potential for growth beyond 12.5 million bpd, given the current oil price levels.
Curiously, the release of the EIA report did not provide the expected support to oil markets. Despite the positive catalysts of declining inventories and reduced domestic production, WTI oil experienced a pullback below $70, while Brent oil dipped below $74.50.
Traders appear to be focusing on the hawkish remarks made by Jerome Powell, expressing concerns that additional rate hikes could place excessive pressure on the economy and diminish the demand for oil. Furthermore, the unexpected 50 bps rate hike by the BoE added further downward pressure on oil prices.
