Summary:
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DEO inventories: +6.4M vs +3.7M exp. +6.5M prior
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Build smaller than last night’s API (+9.9M)
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Oil remains close to 2-month low
A fourth consecutive 6M+ build in the weekly DOE crude oil inventory release shows that US stockpiles continue to rise, but compared to last night's monster rise in the API equivalent and when the components of the report are considered it may not actually be that negative for the price of oil. The following data is shown in the format of actual vs expected unless otherwise stated:
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DOE oil inventories: +6.4M vs +3.7M
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Gasoline inventories: -4.8M vs -1.7M
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Cushing inventories: +1.4M vs +1.8M prior
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Distillates: -2.3M vs -2.0M
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Production: 10.9M bpd vs 10.9M bpd prior
On the whole the report could be described as fairly neutral with larger declines than expected seen in Gasoline and Distillates offsetting the build in the headline. AS far as that is concerned, while a rise of 6.4M is no doubt high, it is well below the +9.9M seen in the API last night so put in this context maybe it is not so negative. Furthermore, looking at the past 5 years there does appear to be some seasonality at play here, with the average over this period seeing stockpiles rise for the months of October and November before falling back into year-end.
Despite another large rise in the weekly inventory number the year so far has actually been pretty low relatively speaking. Also, the rise in recent weeks is in keeping with the average of the past 5 years which has shown a positive seasonality for this release around this time of year. Source: XTB Macrobond
Oil is actually showing a small gain on the day after the release with the market looking to recover from Tuesday’s heavy declines. Lows around 75.20 coincide with prior swing levels and a failure to force down below them could allow a recovery toward 78.95. Source: xStation
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