EIA reported a very bullish oil storage report today, but the key question on everyone's mind is, "How sustainable is this draw?"
My take on the incoming inventory draw is that this week's large crude draw was impacted by the timing of crude exports/imports (we detailed that in our weekly crude storage report). And for the following week, the crude draw is materially lower.
With that said, we do expect crude inventories to keep declining to the end of August. If our projections are correct, we expect US commercial crude inventory to fall to low ~400. Barring any surprise US SPR releases, the market is already anticipating this.
For readers equipped with this knowledge, please do not be surprised when I say that some of the recent price moves are already pricing in this incoming crude draw.
As a result, we are unlikely to break the pivotal resistance level at $85/bbl without a meaningful move in crack spreads (higher). The implication for this is that WTI is more likely to be skewed to the downside in the coming weeks than going up. Please be positioned accordingly.