Investing.com -- Oil prices settled lower Tuesday on oversupply concerns after President Donald Trump declared a national energy emergency as part of plan to drastically boost domestic production, but oil traders may have some reprieve later this week as Macquarie forecast a larger drawndown in weekly domestic supplies, driven by surging crude exports.
NYMEX WTI February futures fell 2.6% to settle at $75.89 a barrel
"We are forecasting US crude inventories down 7.9 MM BBL for the week ending January 17. This compares to our early look for the week which anticipated a 4.7 MM BBL draw, and a 2.0 MM BBL draw realized for the week ending January 10," analysts form Macquarie said in a recent note.
The forecast for a larger crude inventory drawdown comes as analysts expect a significant decrease in net imports, with exports sharply higher by 1.0 million barrels per day and imports up slightly by 0.1 million bpd on a nominal basis.
The outlook for a decline in domestic supplies comes as concerns about an upcoming surge in U.S. energy production have been thrusted into the spotlight as Trump signed an executive order aimed at boosting production.
"The inflation crisis was caused by massive overspending and escalating energy prices, and that is why today I will also declare a national energy emergency. We will drill baby, drill," Trump told reporters while signing the a national energy emergency order.
In the immediate-term, however, Macquarie sees a 0.5M bpd fall in implied domestic supply following a strong print last week, while crude runs are expected to be lower by 0.6M bpd.
But product inventories including gasoline and jet fuel stockpiles are expected to increase by 3.2M bpd and 1.5M bpd, respectively, the analysts forecast, while distillate stock are seen falling by a modest 0.6M bpd.
Still, the the "timing of cargoes remains a source of potential volatility in this week’s crude balance," they added.