U.S. crude stocks drop little vs. forecast, raising demand questions

investing.com:

Investing.com — U.S. crude inventories fell by just a quarter of expected levels last week, government data showed on Wednesday, despite an end to supply injections from the national reserve, which oil bulls typically blamed for poor market optics. 

Changes to fuel inventories were also underwhelming, the Weekly Petroleum Status Report from the Energy Information Administration, or EIA, showed. Both gasoline and distillate balances dropped less than forecast, raising questions about demand in a summer travel period that should logically see large draws.

The U.S. crude inventory balance fell by 0.6M barrels during the week ended July 21, versus the 2.348M-barrel decline forecast by industry analysts tracked by Investing.com. In the prior week to July 14, crude stockpiles slid by 0.708M barrels after a build of 5.946M the prior week — the most in a month.

Interestingly, the weak crude draw reported by the EIA did not come with what had been the market’s caveat for months — release of crude from the U.S. Strategic Petroleum Reserve. 

Prior to this, weekly drawdowns from the reserve had been a point of contention for oil bulls, who said the additional oil had often suppressed crude prices from rallying. The so-called SPR draws stopped two weeks ago, leaving open the question of whom those long oil would blame if crude prices drop hereon. With just days to the conclusion of July, both U.S. crude and Brent are carrying a 12% gain on the month — all on the notion that demand for oil would just fly.

The lower-than-expected crude draw for last week also came on the back of the much ballyhooed million-barrel-per-day production cut supposedly carried out by the Saudis for all of July — again raising questions on who would bear