WTI crude settled at $73.34/bbl on June 23, extending losses ahead of the weekly Energy Information Administration (EIA) inventory report expected to show a 1.5-million-barrel crude inventory build for the week ending June 19. API data released late Tuesday indicated a 2.1-million-barrel increase, above analyst expectations.
Gasoline demand declined 240,000 b/d week-over-week to 8.9 mb/d, according to EIA weekly data. The decline during the summer driving season is a bearish signal that suggests consumers are adjusting to elevated retail pump prices and a softening economic outlook.
Refinery utilization edged up to 93.5%, up 0.5 percentage points from the prior week, maintaining near-maximum throughput. High utilization combined with weak demand is expected to keep product inventories building, particularly for distillates which are already 8% above the five-year average.
Crude stocks at Cushing, Oklahoma — the WTI delivery point — stand at 34.5 million barrels, 12% above the five-year average. The ample storage at the delivery point has compressed the front-month WTI contango to $0.15/bbl month-on-month, suggesting no physical tightness.
The inventory build confirms the demand weakness signal from PMI data. Maintain a short-dated procurement strategy — no need to extend coverage more than 30 days. If the EIA confirms a 1.5M+ build, WTI could test $72. Use $70 floor of 90-day calendar spreads.