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Oil extends gains after large inventory draw

16:13 10 July 2019

Summary:

  • Crude oil inventories: -9.5M vs -1.9M exp. -1.1M prior

  • Comparable drop to last night’s API reading

  • Oil (+2.3%) jumps above $60 in initial response 

 

The weekly government oil inventory data from the US has shown a large decline, boosting the crude markets that were already firmly higher on the day further. A print of -9.5M means that there have now been 4 consecutive draw downs with 2 of the last 3 in the vicinity of the -10M mark. Against a consensus forecast of -1.9M and a prior reading of -1.1M this afternoon’s data looks like a large downside surprise and even though it appears as less of a shock compared to last night’s API print of -8.2M it is still no doubt a sizable drop.

Recent declines in the level of US stockpiles have seen the inventory figure pull back from near its highest level of the past 5 years towards the average. Source: Bloomberg

 

Components of the report were as follows:

  • Gasoline: -1.5M vs -2.0M exp

  • Cushing: -0.3M vs +0.7M prior

  • Distillates: +3.7M vs +0.8M exp

 

Looking at the components of the release the picture is not quite so supportive of price with a large build in distillates in particular taking the edge off the headline number. The initial reaction was clearly positive for the crude markets with both Oil and Oil.WTI rallying up to their highest levels of the day. However, since then there’s been a bit of indecision and the market has pulled back a little from the highs despite remaining above the $66 mark. 

Oil jumped in the immediate reaction to the data but has failed to make a sustained push higher with price still hovering around the 66.00 mark. Source: xStation

 

D1

On a daily chart the market has extended back up near recent swing highs around 66.70 and this level could be seen as potential resistance. Potential support at 64.50. 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.

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