Summary:
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Weekly EIA inventories: -0.5M vs -2.7M exp
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Highest reading in 3 weeks but below last night’s API (+2.5M)
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Oil and Oil.WTi both firmly higher on the day after recent declines
There’s been some wild swings in the oil price of late and as such today’s inventory data may be even more keenly viewed than usual. Energy markets fell to their lowest level in over a year yesterday with decline in excess of 4% and 6% for Oil and Oil.WTI respectively but they have both bounced were trading firmly higher today by around 2-3% before the latest inventory data from the US. The weekly EIA inventories did show a 3 consecutive decline, but a print of -0.5M was less negative than the -2.7M median forecast. The prior reading was -1.2M and last night’s API showed an unexpected rise of 2.5M.
Oil has extended its earlier gains since the release with the market attempting to get back above the 57.80 mark. Source: xStation
As well as the headline reading the usual subcomponents were also announced, with the following listed in the format of actual vs forecast unless otherwise stated:
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Gasoline: +1.8M vs +1.6M
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Distillates: -4.2M vs +0.8M
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Production unchanged at 11.6 Mbpd
The standout here is the distillates figure which showed an unexpected drawdown and a large one at that.
Oil has now rallied over 200 ticks from Tuesday’s lows of 55.90 as the market seeks to recover after 3 heavy daily declines. Almost whichever way you look at it price remains in a downtrend but seeing as the market has tumbled by more than 35% from peak to trough in just 2 1/2 months there is some suggestion that the sell-off is overdone. Bulls may take some pleasure in the recent positive divergence in the RSI which has actually unwound from oversold territory in recent weeks despite price falling lower. It would be a brave call to try and call a bottom in a market which has fallen so hard but those that do may be rewarded by a swift bounce as given the size of the fall it wouldn’t take a huge retracement to see a sizable move higher.
Oil has rallied today after the recent selling but price remains in a pretty clear downtrend. Positive divergence on the RSI could be seen as a positive for longs but for now the recovery appears to remain fragile. Source: xStation
