Summary:
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Oil remains under pressure and dips back below $60
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Weekly inventories show larger than expected build (+3.6M)
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US production unchanged at 11.7 mbpd
Oil bulls have had a testing time of late and they will have received little cheer from the latest US inventory data which showed a larger than expected rise. An increase of 3.6M barrels in the past week was above the +0.6M expected, and pretty much inline with last night’s API equivalent which showed +3.5M. The rise was a little smaller than the 4.9M seen last time out but it still makes it 10 increases in a row, showing there is quite clearly excess crude in the US at present.
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Oil dropped sharply after the release and fell around 60 ticks in the minutes that followed. The market did recover afterwards though and while it remains a little lower since the data dropped there’s not really been a strong and clear direction to the lasting impact yet. Source: xStation
In addition to the headline number there are also several subcomponents of interest in the report, with the following stated in the format of actual vs expected unless otherwise stated:
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Gasoline: -0.8M vs +1.0M
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Distillates: +2.6M vs -0.8M
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Cushing: +1.2M vs -0.1M prior
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Production: 11.7 mbpd - unchanged from prior and up 20% Y/Y
On balance these metrics are perhaps a little negative for the price of Oil with the distillates and cushing measures both supporting the build in the headline. Production remains flat at 11.7 mbpd but this still represents an increase year-on-year of 20% and suggests that the US is carrying on and pumping close to its maximum capacity despite the recent swoon in the price of crude.
Longer term Oil remains in a clear downtrend with lows of 58.68 of utmost importance if a recovery can ensue. Should these levels hold then price will have to get above 61.78 before fib retracement of the decline can be targeted with the 23.6% at 65.30. A break below 58.68 would pave the way for another leg lower. Source: xStation
