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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.

Oil remains near recent highs as US production hits record

17:09 21 February 2019

Summary:

  • EIA inventories: +3.7M vs +3.1M exp

  • US production hits record high of 12M bpd

  • Oil remains around the $67 mark in mixed reaction

 

The weekly crude Oil inventories have been released 1 day and half an hour later than usual this time out due to the US bank holiday for Presidents day on Monday and shown a fifth consecutive build. The rise of 3.7M barrels was larger than the consensus forecast of +3.1M and also higher than last week’s +3.6M reading. In fact, this is the 2nd largest build out of the last 5. Furthermore last night’s private API number showed a smaller rise of 1.3M so whichever way you look at it this is pretty high. However, the headline reading only provides a snapshot for this release with several of the components just as important in determining market reaction, none more so than the weekly US production number.

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Here there was more bad news for Oil bulls, with US production increasing to its highest level on record in coming in at 12M bpd. This rise in production has been one of the biggest themes on the supply side of the market in recent years and it’s showing little sign of letting up. The Shale oil revolution has been behind this major increase, and even the sharp drop seen in the oil price in 2014/15 seemingly only provided a temporary pause in what has been a strong and clear uptrend that shows little sign of ending anytime soon.  

US Oil production increased further in the past week, moving up to its highest level on record. Source: Bloomberg

 

In addition to the two aforementioned figures, there are also several subcomponents worth mentioning, with the following listed as actual vs expected:

 

Gasoline: -1.5M vs -0.5M

Distillates: -1.5M vs -1.5M

Refinery utilisation: 0.0% vs -0.2%

 

The big picture for Oil remains fairly constructive from a technical point of view, even if the fundamentals both in terms of supply and the global economy appear less supportive. The inverse head and shoulders mentioned previously remains valid above the 63.65 level and for the time being most indicators point to the market being in an uptrend. With 6 of the last 7 candles (not counting today’s) green, it’s clear that bulls remain in control of the tape for now and until there’s a daily reversal then there’s little to go on for shorts.

The chart for Oil remains constructive and while it may be overbought in the near-term the market appears to remain in an uptrend with a possible inverse head and shoulders setup in-play. Source: xStation   

 

 

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 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. XTB 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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