Oil extends gains after massive inventory drawdown

Summary:

• DOE Inventories: -10.0M vs -2.9M exp. API: -11.1M

• Drops also seen in subcomponents

• Oil builds on earlier gains above $60 a barrel

The weekly crude oil inventories showed a large double-digit drawdown, supporting the large drop seen in last night’s API and sending the price of Oil up to its highest level of the week. Its now 2 consecutive drawdowns for this data point after last weeks decline of 2.7M. The print of -10.0M was well below the -2.9M consensus forecast and not far from the private reading of -11.1M seen in the API. Other noteworthy aspects of the report are as follows:

• Gasoline: -2.1M vs -0.4M exp

• Distillates: -2.1M vs +1.4M exp

• Production: 12.5 Mpd - up by 0.2M 

Oil spiked higher after the release although there’s been a lack of follow through seen since. This could be explained by the fact that while the drawdown is no doubt large, it is actually a little smaller than last night’s API. Source: xStation 

Longer term, the trend could be turning higher for Oil with price edging back above the 21 EMA. It’s over a month since the market ended the day above the 21 EMA and while the 8 remains below it, it has gained and turned higher in recent trade. Source: xStation