Insights 
VT 
A private survey from the American Petroleum Institute (API) indicated a larger headline crude oil draw than expected, with the predicted figure at -0.9 million barrels. In contrast, the anticipated changes for distillates and gasoline were +1.0 million barrels and +0.1 million barrels, respectively.
The API survey collects data from oil storage facilities and companies. This preliminary report precedes the official data release from the US Energy Information Administration (EIA), expected on Wednesday morning US time.
EIA Comprehensive Data
The EIA report is considered more comprehensive, drawing on data from the Department of Energy and other government agencies. While the API provides overall crude storage levels and weekly changes, the EIA report offers detailed statistics, including refinery inputs and outputs and storage levels across different crude oil grades.
The EIA report is deemed more accurate for assessing the state of the oil market, providing insight into light, medium, and heavy crude oil storage levels.
The private survey data showing a large crude oil draw is a bullish signal for the market. This suggests demand is outpacing supply more than we initially thought, which could push oil prices higher in the immediate term. Traders should watch for a potential price spike in WTI and Brent futures leading into the official report.
The key event this week is the government’s official EIA data release. If the EIA confirms a significant draw, it would strengthen the case for a sustained price rally, especially since this is happening at the tail end of the summer driving season. We saw a similar trend in late 2023 when tightening inventories and OPEC+ cuts sent prices on a strong upward run.
Market Implications and Strategic Options
With WTI crude already hovering near $92 a barrel, its highest level in over a year, this inventory news is particularly sensitive. Recent satellite data has also shown a slowdown in exports from key Middle Eastern ports, adding to global supply concerns. U.S. commercial crude inventories have already fallen by over 15 million barrels in the last month, so another large draw would confirm a tight market.
For derivative traders, this situation suggests considering short-dated call options to capitalize on a potential price jump while limiting downside risk if the EIA data disappoints. A move above the recent high of $93.74, a level last seen in August 2024, would be the next technical target. This strategy allows us to participate in the upside with a defined and manageable risk.
We can also look at spreads, such as the WTI-Brent spread, to gauge international market tightness. A widening spread could indicate that U.S. supply issues are becoming more pronounced relative to the global benchmark. Furthermore, with distillate season approaching, bullish positions on heating oil futures could become more attractive if crude inventories continue to decline.
