Crude oil prices have fallen for a third straight session, weighed down by concerns about a potential market surplus later in the year. This decline occurred despite a larger-than-expected drawdown in US crude inventories, according to the US Energy Information Administration. Data showed that crude stockpiles decreased by 3.95 million barrels to 422 million barrels last week, the first inventory draw in three weeks.
However, this bullish signal was overshadowed by a surprise increase in refined product inventories. Analysts suggest this build indicates weakening demand, even during the peak of the northern hemisphere’s summer travel season. Adding further pressure, recent data points to a rise in Russian crude exports. Shipments averaged 3.23 million barrels per day in the four weeks to July 13, a 3 per cent increase from the previous period, based on Bloomberg’s tanker-tracking figures.
The rise in Russian exports coincides with a significant decrease in domestic refinery activity, increasing the volume of crude available for export. ANZ analysts suggest that the market remains wary of looming oversupply risks, saying, “While the draw in US crude inventories is typically a bullish sign, the rising product stockpiles and growing Russian exports are raising red flags for traders anticipating a tighter market. Caution is returning as the summer demand boost appears to be losing steam.”
These factors, compounded by geopolitical uncertainty stemming from potential US secondary sanctions on countries purchasing Russian crude, have contributed to the downward pressure. Recently, Brent crude traded near $US83 a barrel, while West Texas Intermediate hovered around $US79.
