Phil Flynn | Price Blog
The oil market did a jump, and then a dump as oil traders shrugged off bullish EIA data because it was skewed by tropical storm Barry. Oil prices failed to hold onto gains even after a massive 10.8-million-barrel crude draw, according to the Energy Information Administration (EIA). Crude oil supply has fallen 6 weeks in a row erasing almost all of the 40 million barrels of upward adjustments in previous EIA reports. A very large drop in U.S. oil production, that fell by 700,000 barrels a day to 11.3 million barrels, gave the edge to oil bears as it seemed to suggest that perhaps the draws would not have been as large if we had not seen so much U.S. oil production get shut in.
Yet the bulls might point to a very large 1.3-million-barrel jump in domestic demand. We also saw total demand on the U.S. system, up 2.2 million barrels per day (bpd). Bulls could also point to 3.3 million barrels of U.S. oil export demand suggesting that global demand is still strong despite the 7-year weakness in the European Manufacturing Sector. Of course, on the other hand, there is good old Mario Draghi that more than likely will do whatever it takes. That should also boost up oil demand.