As we wrote in our July 2020 newsletter, crude and products demand faces a hard ceiling, a softer floor, and a narrowing range. Demand likely won’t exceed pre-COVID levels until the virus is defeated; new outbreaks could curtail demand (albeit not to April or May levels); and better understanding of COVID’s medical risks likely ensures better risk management by consumers and businesses. We believe this provides a useful framework for understanding crude markets – and recent data continues to support this theory. Demand for crude and products is inching towards 5-year averages. This week, we’ll explain why crude stocks fell by over 10 million barrels in the most recent weekly data reported from the U.S. Energy Information Administration (EIA).

Crude storage declines U.S. weekly stocks of crude oil, excluding the Strategic Petroleum Reserve (SPR), totaled about 526 million barrels for the week ending July 24^th, down by about 10.6 million barrels from the prior week. According to the EIA, there were no injections or withdrawals from the SPR