U.S. Preview: U.S. Crude Supplies Expected to Decrease by 700k Barrels

US Economy | Written by CEP News | Jul 02 08 14:04 GMT |
(CEP News) - U.S. crude inventories probably declined by 700k barrels last week, a report from the U.S. Energy Information Administration (EIA) is expected to reveal.

The EIA will release crude, gasoline and distillate inventories at 10:35 a.m. EDT for the week ending June 27.

"Expectations are that U.S. crude oil inventories will show a decline today of 700K barrels, continuing the general downward trajectory in inventories observed over the past month and a half," wrote Sacha Tihanyi, associate currency strategist at Scotia Capital in a note to clients.

Crude prices have rallied to record highs partly because of supply constraints in the United States. A time of year where inventories historically increase, they have declined in five of the past six weeks. The EIA said last week that supplies are constrained and "near the lower boundary of the average range for this time of year."

At the same time, however, U.S. demand has been declining. Nine straight reports have shown year-over-year declines. In last week's report, demand fell to an 18-month low of 20.08 million barrels per day.

On Wednesday, WTI crude prices have traded in a range of $140.31-142.34 per barrel. At 9:57 a.m., WTI is down $0.01 to $140.94 per barrel.

The Bloomberg consensus estimate suggests gasoline inventories will increase by 500k while distillate inventories will increase by 1,500k barrels. Refinery utilization is expected to increase 0.60% to 87.2% of operable capacity.

Gasoline and distillate supplies aren't as tight as crude. The EIA said last week that gasoline supply is in the "lower half of the average range" while distillate inventories are in the middle of the average range.

By Adam Button, abutton@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it

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