Last week’s report ended with a call for a sideways trade with the crude oil market holding between $55.33 and $50.95. September Crude Oil futures traders accommodated by posting a range of $53.94 to $51.44. The price action formed an inside move which typically means trader indecision.
Trader indecision may have been caused by a technically oversold market, or the lack of fresh news. Coming off the previous week’s Greek bailout vote and the crash in China’s equity markets, this week’s news was pretty tame. Iran signed a nuclear deal with several western powers, but that seems to have been priced into the market. This left reliable supply and demand as the key influences on this week’s price action.
This week, the U.S. Energy Information Administration (EIA) reported that total crude stocks fell the week-ended July 10. The catalyst behind the drawdown was record refinery runs. Crude inventories fell 4.3 million barrels to 461.42 million, compared with trader expectations for a decrease of 2.0 million barrels.
Despite the greater-than-expected drawdown, oil prices broke on the news because the EIA numbers were far less than the reading by the industry group the American Petroleum Institute (API). Its report showed a 7.3 million barrel decline. Perhaps the large discrepancy should be added to the list of reasons for trader indecision.
Obviously, the EIA numbers were better-than-expected, but not as bullish as the API figures.…