Summary:
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EIA inventories: -3.1M
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Gasoline and distillates show sizable builds
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Oil remains under pressure after Tuesday’s sell-off
The weekly crude oil inventory release from the EIA has shown a slightly larger than expected drawdown, although the report overall is pretty mixed. There was a lot of noise in the immediate aftermath, but in general it appears that the news has not provided a bullish enough catalyst to see more of yesterday’s declines recoup and price is drifting towards the recent low of 63.80. Selected figures from the release are shown below:
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EIA Inventories: -3.1M vs -2.7M exp. -9.5M prior
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API (released last night): -1.4M vs -2.7M exp
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Gasoline: +3.6M vs -2.4M exp.
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Distillates: +5.7M vs -1.0M exp
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Production: -0.3M bpd
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Refinery utilisation: -0.3% vs -0.3% exp
The initial reaction saw the market trade in a typically volatile fashion but as the dust settles on balance, it seems to be mildly negative with price trading at new low levels for the day. Source: xStation
The longer term picture for crude oil is a little unclear at the moment with Tuesday’s session seeing the largest drop in several weeks. The root cause of the selling appears to have been caused by an apparent de-escalation in the US-Iran tensions which have threatened for quite some time now to cause a supply side shock. Technically speaking, a rising channel from the low seen last month is now being tested and a break below there would pave the way for a significant decline. This appears to be a potential bear flag and should price take out recent lows around 63.80 then a retest of the area just below $60 a barrel could well follow.
Oil is testing some potentially key longer term support and a possible bear flag can be seen on D1. Source: xStation
