Crude Oil Prices Erase Early Gains on a Bearish EIA Inventory Report

Stronger Russian crude exports are also adding to global oil supplies, which is bearish for prices. Data compiled by Bloomberg show the four-week average of Russian crude exports rose to 4.13 million bpd through June 28, the highest since Russia invaded Ukraine in 2022.  Russia may be boosting its crude exports as the country’s refining capacity has plunged due to damage at its refining facilities from Ukraine drone and missile attacks.

Signs of mounting global supplies are negative for crude prices, after the International Energy Agency said in a monthly report last Friday that the United Arab Emirates boosted crude oil production to an all-time high of 4.1 million bpd in June.

The International Energy Agency (IEA) warned on June 17 that the Iran war’s impact on global oil demand will be much deeper than previously anticipated, saying world oil consumption will decline by -1.1 million bpd this year, a larger drop than a previous estimate of -420,000 bpd.

The outlook for higher US crude output is negative for oil prices.  The Department of Energy (DOE) last Tuesday raised its US 2026 crude production estimate to 13.78 million bpd from a June estimate of 13.72 million bpd.

As a bearish factor for crude, OPEC delegates said on May 14 that the cartel aims to continue a series of oil quota increases over the next few months, completing the return of halted oil production by the end of September.  The group already formally agreed to restore about two-thirds of the 1.65 million bpd supply cutback it made back in 2023 and said it plans to raise output targets further and to revive the final portion in three more monthly stages.  On Sunday, OPEC+ said it will boost its crude output by 188,000 bpd in August, though that increase might prove difficult, as Middle East producers are still restarting output curtailed by the war in the region.  OPEC’s June crude production rose by +2.34 million bpd to 18.75 million bpd. 

Vortexa reported on Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -32% w/w to 82.85 million bbl in the week ended July 10.

Today’s weekly EIA report is bearish for crude oil and products.  EIA crude inventories fell -1.69 million bl, a smaller draw than expectations of -2.1 million bbl.  Also, EIA gasoline supplies fell -1.5 million bbl, a smaller draw than expectations of -2.0 million bbl.  In addition, EIA distillate stockpiles unexpectedly rose by +4.56 million bbl versus expectations of a -1.85 million bbl decline.  Finally, crude supplies at Cushing, the delivery point of WTI futures, rose by +430,000 bbl. 

Today’s EIA report showed that (1) US crude oil inventories as of July 10 were -6.2% below the seasonal 5-year average, (2) gasoline inventories were -8.4% below the seasonal 5-year average, and (3) distillate inventories were -11.1% below the 5-year seasonal average.  US crude oil production in the week ending July 10 was unchanged w/w to 13.861 million bpd, just below the record high of 13.862 million bpd posted in the week of November 7.

Baker Hughes reported last Friday that the number of active US oil rigs in the week ended July 10 remained unchanged at a 13-month high of 445 rigs, up from the 4.25-year low of 406 rigs posted in December 2025.  However, the number of US oil rigs remains sharply below the 5.5-year high of 627 reported in December 2022.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com