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Oil back near 2019 highs after inventory draw

16:15 13 March 2019

Summary:

  • Weekly Oil inventories: -3.9M vs +2.7M exp

  • Larger drawdown than API (-2.6M); Production falls

  • Oil moves up to trade near highest level of the year

 

The main piece of data for Oil traders this week has delivered what is on balance a positive reading for the price of crude, and sent the market back up near its highest level of the year. The weekly EIA inventory release showed a drop of 3.9M, which was comfortably below the consensus forecast for a rise of 3.0M and marks a large drop on the +7.1M prior. Tuesday evening’s API number is often seen as the best gauge of market expectations, and with this coming in at -2.6M today’s more widely viewed release still appears favourable for bulls.

Oil inventories are still relatively high compared to previous years although the 2019 level is converging on the 5-year average. Source: XTB Macrobond  

 

As well as the headline reading, the subcomponents of the report are also important and these were as follows:

 

Gasoline: -4.6M vs -3.0M exp

Distillates: +5.0M vs +5.5M prior

Refinery utilisation: 0.10% vs 0.5% exp

Change in US production: -100k

 

On balance the data on the whole looks mildly positive with US production falling back from its record highs and a sizable draw in gasoline outweighing the rise in distillates. The initial reaction to the release has seen the Oil market spike to its highest level of the day, although the move so far is not too clear and typically volatile.

Oil is back near its recent highs in the upper $67 region after the release and trading at its highest level in over a fortnight. Source: xStation

Longer term the significance of the region around 67.80 is more readily apparent, with a move above there paving the way for a sizable gain. The longer term inverse S-H-S targeting 76.65 remains in play. Source: xStation

 

This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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