US: Crude and gasoline inventories tightened throughout July - TDS

US crude and gasoline inventories tightened throughout July amid the seasonal summer demand boost, notes the research team at TD Securities.

Key Quotes

“In contrast, distillate inventories continued to build at a modest pace and remained at low levels. Despite tightening stocks, it was worries of increased supply from OPEC+ that drove market pricing off the highs.”

“We believe Brent has been undervalued and contango spreads are not representative of the ample global supply risks.”

“Spare capacity is nearly maxed out and further disruptions would serve to severely tighten markets. For that reason we expect Brent prices to recover relative to WTI, leading to a wider differential and higher exports, which along with seasonal factors, should see crude inventories continue tightening significantly in August.”