Oil Update after DOE Release

August 12, 2020

DOE's were supportive. The big 3 (Crude, Distillate, Gasoline) showed an inventory drop of -7.5MM vs an expectation of -2.5MM bbls. Exports were up. More importantly, Oil production fell 300KBpd to 10.7MMBpd. With the exception of one weekly report on June 12th, this is the lowest production level since Covid-19 began. It augers support for the market given higher prices have not apparently brought back production yet, here in August. Lack of speculative length is also supporting the market, as the market is unable to follow through to the downside on any weakness. Since oil continues to hover near the post-Covid highs, that is indicative of a healthier market in the near term, all else equal.

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