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Bearish Sentiment Keeps Traders From Going Long On Crude


The June WTI crude oil futures contract witnessed fluctuations throughout the week, responding to various factors. Despite solid U.S. economic data that fueled a stronger dollar and raised expectations of an interest rate hike by the U.S. Federal Reserve in June, prices managed to climb approximately 2.68% for the week. This increase is significant considering that a stronger dollar can potentially dampen oil demand by increasing the cost of fuel for holders of other currencies.

Supply Dynamics

One of the significant factors impacting the market was the Strategic Petroleum Reserve (SPR). U.S. commercial crude oil stockpiles unexpectedly increased due to another release from the SPR. However, SPR stocks drew down for a seventh consecutive week, reaching their lowest level since September 1983. This drawdown is a result of a congressionally mandated release last year.

The Energy Information Administration (EIA) inventories also played a role in market dynamics. Crude inventories rose by 5 million barrels, contrary to analysts' expectations of a drop. Gasoline stocks fell by 1.4 million barrels, while distillate stockpiles rose by a marginal 0.1 million barrels. The four-week average of gasoline product supplied, indicating demand, reached its highest level since December 2021.

In terms of production, the EIA revised the number of drilled but uncompleted (DUC) wells in the Permian Basin, indicating higher productivity than previously estimated. U.S. oil…

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