Summary:
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DOE inventories show a surprise build (+6.8M)
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Higher than both expected (-2.6M) and last night’s API (+3.7M)
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Oil drops below 71.00 to trade at 4-month low
The biggest event of the week for Oil traders has lived up to its billing with a large move lower seen in the market following the latest inventory data showed a larger than expected build. An increase of 6.8M was well above the -2.6M consensus forecast and as notably higher than last night’s private API reading which showed a rise of 3.7M. The headline print was in fact the highest since January and given that higher inventories indicates either greater supply or lower demand then it is unsurprising that we’ve seen the initial flush lower.
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The market immediately took a dim view of the DOE figures, with Oil falling sharply. Price has dropped around 90 ticks in the half an hour since the release. Source: xStation
Having said that the DOE report contains further information on the Oil market which shouldn’t be overlooked, even if it doesn’t attract the headlines as much as the weekly change in crude oil. Here there was more negative news for the market and oil bulls will be left scratching around for some positives in what appears overall to contain little to support that view. Selected components in the form of actual vs exp unless otherwise stated can be found below:
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Gasoline: -0.7M vs -0.3M
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Distillates: +3.6M vs +1.0M
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Production 10.9 mbpd vs 10.8mbpd prior
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Production up 0.9% on the week and 14.7% Y/Y
Oil has broken below potentially key support around the 71.00 handle following the release. Price is now close to retesting its 200 day SMA for the first time in a year as the uptrend seen since last August comes under increasing threat. Source: xStation
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