Crude inventories have fallen more than expected.

Oil markets continue to face downward pressure as traders closely monitor the ongoing economic issues in China. This focus on China's economic problems is influencing market sentiment and contributing to the current state of the oil market.

Key Insights

• The previous week saw a decline of 6 million barrels in crude inventories.
• Domestic oil production experienced a slight increase from 12.6 million bpd to 12.7 million bpd.
• The Strategic Petroleum Reserve expanded from 347.8 million barrels to 348.4 million barrels.

On August 16, the U.S. Energy Information Administration (EIA) published its Weekly Petroleum Status Report, revealing several key findings. Firstly, crude inventories decreased by 6 million barrels compared to the previous week, surpassing analysts' consensus expectation of a decline of 2.3 million barrels. Currently, U.S. crude oil inventories are 1% lower than the five-year average for this time of year.

Furthermore, total motor gasoline inventories declined by 0.3 million barrels, while distillate fuel inventories increased by 0.3 million barrels. Additionally, crude oil imports averaged 7.2 million barrels per day (bpd), indicating a rise of 0.48 million bpd from the previous week.

The U.S. continued to acquire oil for the Strategic Petroleum Reserve, leading to an increase in reserves from 347.8 million barrels to 348.4 million barrels.

In response to higher oil prices, domestic oil production rose from 12.6 million bpd to 12.7 million bpd as producers adjusted their production levels.

Following the release of the EIA report, WTI oil faced downward pressure and is currently attempting to settle below the $81 level. Oil traders are closely monitoring disappointing news from China, which is experiencing slower growth than previously anticipated.

Similarly, Brent oil is losing ground and is trading below the $85 level. Concerns related to China are acting as a significant negative factor for Brent oil. Additionally, the consistent increase in U.S. domestic oil production may exert additional pressure on oil markets in the near future.