Nil, Baby, Nil; WTI Extends Losses Despite Big Crude Production Drop, Inventory Draw

Oil prices are down for a fourth session in a row this morning even as API reported a drop in US oil inventories and Trump reached a trade deal with Japan that imposes a 15% tariff on imports from Tokyo.

US Treasury Secretary Scott Bessent said he’ll discuss a potential extension of the trade truce with China during talks in Stockholm next week.

The discussions can now take on a broader array of topics, potentially including Beijing’s continued purchases of “sanctioned” oil from Russia and Iran, he said.

“We are racing towards the Aug. 1 deadline for reciprocal US tariffs,” said Harry Tchilinguirian, group head of research at Onyx Capital Group.

“Japan deal done, now it is a question of if they pull a rapid deal out of the bag for the EU.”

Will the official data line up with API’s reported drawdown?

API

Crude -577k

Cushing +314k

Gasoline -1.2mm

Distillates +3.5mm

DOE

Crude -3.169mm

Cushing +455k

Gasoline -1.738mm

Distillates +2.931mm

The official data showed a much larger crude draw than API, but the rest of the data lined up…

Source: Bloomberg

The total commercial crude inventory drawdown was made worse by the second week in a row of SPR drawdowns…

Source: Bloomberg

US Crude production tumbled by over 100k b/d last week to its lowest level since Januaryas the rig count continues to plunge…

Source: Bloomberg

WTI extended losses after the data

Source: Bloomberg

So much for drill, baby, drill!