The U.S. Energy Information Administration (EIA) revealed on Wednesday that crude inventories climbed by 5.654 million barrels in the week ended July 3. Economists had forecast a decrease of 3.400 million barrels.

At the same time, gasoline stocks fell by 4.839 million barrels, while analysts had expected a drop of 0.002 million barrels. Distillate stocks increased by 3.136 million barrels, while analysts had forecast a decline of 0.075 million barrels.

Meanwhile, oil production in the U.S. remained unchanged at 11.000 million barrels a day.

U.S. crude oil imports averaged 7.4 million barrels per day last week, increased by 1.4 million barrels per day from the previous week.

FXStreet reports that strategists at ANZ Bank apprise that Brent crude oil fell to a low of $42.46/bbl before recovering to above $43/bbl as the rally runs on thin ice amid resurgence of COVID-19 cases.

“Expectations of further inventory withdrawal kept market sentiment positive. Investors are reassessing the fundamental drivers behind the price rally as the demand backdrop looks uncertain and inventories are still burdensome. Oil demand from refiners looks grimmer too, as the margins are yet to pick up, while the recent rally in oil prices and elevated inventories are leaving little room for refiners to ramp up their run rates.” 

“The US Supreme Court ordered that construction of the Keystone XL project cannot begin. This pipeline was designed to carry oil from Alberta Canada to the US. There was another order to temporarily shut down the Dakota Access pipeline within 30 days, which will halt transport of 570kb/d of oil. The impact of this will be muted by weaker refinery run rates, but this can potentially worsen the shale producer conditions.”

“The EIA released its monthly report, revising both production and demand higher for this year. Global demand is likely to contract by 8.15mb/d from a previous estimate of 8.34mb/d.”