EIA's STEO report for August shows us that U.S. oil production in 2023 may be higher than previously expected. Previously, an increase of 800,000 brk/d was expected compared to 2022, and now it is expected to rise 900,000 brk/d to 12.8 million brk per day. If so, this would be the largest production on record. Hence the likely pullback in prices in the last few tens of minutes. The earlier rally, in turn, was linked to the cut in exports to the Czech Republic, Slovakia and Hungary from Russia. Theoretically, exports are supposed to be restored if the problem with paying for transit is resolved.
Meanwhile, doubts have been raised about recent EIA reports. Of course, it is difficult to question the credibility of such an institution, but in the past it has happened many times that estimates and forecasts were later clearly revised. This may be the case not only with the STEO forecast (capital spending by oil companies is the lowest in many years), but especially with the weekly demand data. A lot of data from external sources, directly from stations or refineries, shows an increase in fuel demand, while EIA data shows a drop below 2020 levels! There has been speculation that the data is "tailor-made" for downward pressure on fuel prices, and that in the future the monthly data will revise the incorrect weekly data. Nevertheless, for the moment, the narrative of falling demand prevails, so it is not impossible that prices will find their bottom a little lower.
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The price has clearly fallen, although theoretically one can expect to reach the area of 90.5, where the price consolidated during the previous Asian session. Source: xStation 5
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