Summary:
- DOE inventories: -5.9M vs -2.1M expected
- Oil markets little changed ahead of Friday’s OPEC decision
- Oil ministers comment ahead of key event
There’s been a surprisingly muted reaction in the Oil price to the latest inventory data from the US, probably due to the fact that we are just a couple of days away from the bi-annual OPEC meeting. The weekly DOE inventory showed a print of -5.9M vs -2.1M expected and -4.1M prior with the reading being the lowest since January. Last night’s API came in at -3.0M so whichever way you look at it today’s number represents a large drawdown.
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The current level of oil inventories remains close to the 5-year average and has been fairly consistent on the whole since the start of the year. Source: XTB Macrobond
Looking at the breakdown of the components within the report, large rises in the gasoline and distillates have possibly taken the edge off the big drop in the headline reading while Cushing rose significantly compared to the previous week:
- Gasoline +3277K vs -1000K estimate
- Distilates 2715K vs -600K estimate
- Cushing -1296K vs -6867K last
Some hesitation amongst crude traders is not too unexpected given that the bi-annual OPEC meeting is set to begin in just two days time in Vienna. The main takeaway that traders will be looking for from the event will be whether the organisation continue with their supply cuts, and if they don’t how much they increase output by. Oil ministers are being picked up regularly by newswires already with the Oman delegate saying earlier that he sees progress on a new deal and that the focus will be on over-compliance - several members of OPEC+ have shown greater cuts than required as part of the pact which has been called "over-compliance" with their quotas.
Oil.WTI has moved back above the 23.6% fib of its larger decline at 65.63 in recent hours. The 38.2% level at 67.01 could be worth looking to for possible resistance. Source;: xStation
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