Oil prices received support in the middle of the week from an unexpectedly sharp decline in US Crude Oil inventories last week of 6 million barrels, as reported by the US Department of Energy, Commerzbank's commodity analyst Carsten Fritsch notes.

Crude Oil processing almost reached the annual high of early June

"The API had reported less than half of this decline in inventories the day before. Participants in a Bloomberg survey had expected a drop of less than 1 million barrels. The sharp decline in inventories was driven by a significant drop in net imports due to increased exports and lower imports. In addition, Crude Oil processing almost reached the annual high of early June. The draw in Crude Oil stocks was also stronger than usual for this time of year, widening the gap to the five-year average to 5.5%."

"US gasoline stocks fell by 2.7 million barrels, while US distillate stocks rose by 2.3 million barrels. The situation for distillates, which was still very tight until a few weeks ago, is thus gradually easing. Since the beginning of July, stocks have risen by a good 13 million barrels. The deviation from the five-year average subsequently narrowed to 13%. At the beginning of July, it was still 24%."

"Nevertheless, the US diesel and gasOil crack spreads widened again recently, which is likely due to robust demand. US distillate demand reached its highest level since the end of June last week. The US Department of Energy also reported that US jet fuel demand in the last four weeks reached its highest level since 2019, i.e. before the coronavirus pandemic."