Huitong Finance APP News - On July 29, market analyst Tsvetana Paraskova wrote that this summer, U.S. commercial crude oil inventories have been falling faster than usual. However, the decline in inventories over the past four weeks has failed to trigger an increase in U.S. or Brent oil prices as concerns about Asian oil demand linger.

According to EIA data compiled by market analyst John Kemp, U.S. commercial crude oil inventories fell by a total of 24 million barrels between June 21 and July 19. However, fund managers have bought back most of their previous short positions in WTI intermediate crude oil, leaving the market with little room to support price increases.

While rising tensions in the Middle East prevented oil prices from plunging, concerns about weak demand in Asia and signs that the physical crude market was not as tight as many analysts expected at the beginning of the summer limited gains.

Risk aversion in the oil market has also weighed on oil prices . For example, last week the EIA reported a 3.7 million barrel decline in crude oil inventories for the week ended July 19. This compares to the 4.9 million barrel decline the EIA estimated last week. Gasoline inventories fell by 5.6 million barrels in the week ended July 19, with an average daily production of 10.2 million barrels.

This compares to 3.3 million barrels last week, when production averaged 9.5 million barrels. For middle distillates, the EIA estimates inventories fell by 2.8 million barrels in the week ended July 19, with production averaging 4.9 million barrels per day.

The positive report on U.S. inventories failed to support oil prices for more than a day, even though it suggested U.S. gasoline demand was estimated to have risen by 673,000 barrels per day in the week ending July 19 from the previous week.

“While the latest EIA weekly inventory data helped to reverse the observable onshore inventory trend so far in July from an increase to an overall small decrease, and while near-term U.S. gasoline demand looks much stronger, the oil market remains in a risk-off mood,” analysts at consultancy FGE wrote in a note Friday.

According to FGE, the main bearish factors last week were concerns about oil demand in Asia in the second half of the year and weaker-than-expected manufacturing data in the United States and Europe.

The consultancy noted that some of the hint of high U.S. gasoline demand could be due to gas stations releasing delayed deliveries of gasoline that they were unable to store around July 8 due to Hurricane Beryl in Texas.

“Therefore, in the absence of further evidence of sustained inventory draws, any upside to crude oil prices and structure in the near term is likely to be limited,” FGE said.

A strong hurricane season could upend that forecast if refining operations along the U.S. Gulf Coast are disrupted. Also, rising tensions in the Middle East could support oil prices in the coming days.

However, concerns about economic conditions and oil demand in Asia in the second half of the year will remain a major drag on oil prices. U.S. inventory draws are likely to continue through September, but oil consumption in some Asian countries could continue to disappoint and push prices lower. This could lead OPEC+ to delay easing production cuts, currently expected in the fourth quarter, depending on market conditions.

Brent crude oil daily chart: At 13:21 Beijing time on July 30, the price of Brent crude oil was $78.72 per barrel

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