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Oil prices climbs above $50 on mixed inventory report

Yesterday's weekly oil inventory report from the EIA confirmed Tuesday's API report with a huge 4.1 mio. barrels' draw in crude oil inventories (API = 3.9 mio. barrel-draw). It is the sixth week in a row of declining crude oil inventories in the U.S. and crude oil production is now around 8.62 mio. barrels per day (compared to 9.6 mio. bpd a year ago). Oil prices rose on the data despite surprisingly large build in gasoline stocks (1.4 mio. build). See further details below.

Release: EIA oil data (Consensus)
Crude: -4.053M barrels (-2.36M)
Distillates: -1.80M barrels (0.014M)
Gasoline: 1.37M barrels (0.058M)
Refinery utilization: -0.9%

Oil output in Nigeria which fell around 600,000 barrels per day in the first half of 2016 appears to be recovering by 2-300,000 barrels per day. New talks of a potential ceasefire between rebels and the government could - if successful - result in a return-to-normal production of around 2 mio. barrels per day. Iraqi oil exports likely fell in June to around 3.14 mio. bpd (down by 60,000 bpd from May) and Iran is now taking over as second-largest exporter in OPEC after Saudi Arabia. According to Iraq, the decline is due to maintenance work and increased domestic demand.

The UK exiting the EU continues to take headlines, but markets seem to have calmed somewhat as the exit does not seem to be imminent and the exit negotiation process could likely take months or even years.

Turning to economic data front, yesterday's U.S. Pending Home Sales data form May came out lower than expected; -3.7% (3.9% previous). Also the Personal Spending declined to 0.4% (1.1% previous). Today, the U.S. Initial Jobless Claims and Chicago PMI will be followed closely to see if there is a trend in the recent less solid numbers from the huge country. Also, a row of European data will be published and especially the Euro Zone inflation (CPI) and ECB Account of Monetary Policy Meeting along with Bank Of England's Carney's speech could cause some intraday volatility.