Summary:
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EIA inventory: +6.0M vs +2.8M exp
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However, build smaller than last night’s API
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Oil under pressure and near $81 handle
The weekly EIA crude oil inventory release has shown a 3rd consecutive build and caused the price of Brent to fall below the$81 handle to trade at a 2-week low. A rise of 6.0M barrels in the headline release was well above the 2.3M consensus forecast, and marks the second large build in a row after a reading of 8.0M last time out. However, compared to last night’s private API release that showed a mammoth increase of 9.75M the figure doesn’t look quite so high. In fact the initial market reaction was a pop higher, with Oil gaining around 45 cents in the minutes following the release - presumably because the build was smaller than the API. These gains were short lived though, and the sellers have stepped back in and pushed the market below prior support around 81.15.
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Oil has come under more pressure since the release with the market hitting a 2-week low after the initial pop higher on the release was hit with selling. Source: xStation
The sub components were mixed on the whole and while not as negative for price as the headline, not exactly positive. The following are listed in the format of actual vs expected unless otherwise stated.
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Gasoline: +1.0M vs 0M
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Distillates: -2.7M vs -2.0M
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Cushing: +2.4M vs +1.7M
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Refinery utilisation: -1.6% vs -0.5%
The head and shoulders pattern identified in yesterday’s post is playing out nicely with the market dropping further after breaching the neckline around 82.68. While this would target a move to around 78.60 from a textbook point of view, the breakout level around 79.75 represents a potentially significant barrier before then if the market continues to drop. Source: xStation
