Crude oil prices move higher on Wednesday after declining below support Tuesday following a stronger than expected draw in inventories. Oil imports continue to take the place of US domestic production while demand remains positive. Technically, prices are consolidating but momentum remains negative.
International production continues to take the place of US domestic production. According to the Energy Information Administration, U.S. crude oil imports averaged 7.2 million barrels per day last week, up by 318,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.0 million barrels per day, 0.4% above the same four-week period last year.
U.S. commercial crude oil inventories decreased by 2.7 million barrels from the previous week, slightly more than the 2 million draw expected. At 482.2 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Gasoline inventories decreased by 2.8 million barrels last week, but are above the upper limit of the average range. Distillate fuel inventories decreased by 0.5 million barrels last week and are in the lower half of the average range for this time of year.
Demand remains positive. Total products demand over the last four-week period averaged about 19.7 million barrels per day, up by 3.9% from the same period last year. Over the last four weeks, gasoline demand averaged over 9.0 million barrels per day, up by 1.1% from the same period last year. Distillate fuel demand averaged over 4.1 million barrels per day over the last four weeks, up by 1.6% from the same period last year. Jet fuel demand is up 6.5% compared to the same four-week period last year.
Technically, momentum remains negative with the MACD (moving average convergence divergence) index recently generating a sell signal. This forebodes lower future prices for crude oil.
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