On August 7, the U.S. Energy Information Administration (EIA) released its weekly State of Oil report. The report showed that crude oil inventories fell by 3.7 million barrels last week, far exceeding analysts' expectations of a 400,000-barrel decrease. The current level of crude oil inventories is about 6% below the average for the same period over the past five years.

Gasoline inventories increased by 1.3 million barrels, while analysts were expecting a decrease of 1.8 million barrels. Distillate fuel inventories increased by 900,000 barrels.

U.S. crude oil imports fell by 729,000 barrels to an average of 6.2 million barrels per day. Crude oil imports have averaged 6.8 million barrels per day over the past four weeks.

The Strategic Petroleum Reserve increased to 375.8 million barrels from 375.1 million barrels and the U.S. continues to purchase oil to replenish the reserve. The U.S. will likely continue to add to the reserve as oil prices have recently fallen back to annual lows.

Domestic crude oil production increased from 13.3 million barrels per day to 13.4 million barrels per day. This increase was unexpected as oil prices have recently retreated significantly.

WTI crude oil rose to intraday highs as traders reacted to the EIA report. Interestingly, traders were not concerned about the increase in U.S. domestic crude oil production. From a macro perspective, the oil market has stabilized after the recent sell-off and traders are starting to buy lower.

Currently, WTI crude is trying to stabilize above the $75 per barrel level, and Brent crude prices broke above $78 per barrel, reflecting a broad-based rally in the oil market.