Summary:
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Crude oil inventories: 0.0M vs -2.8M exp
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API showed -4.5M.
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Oil still set for solid weekly gain and higher by nearly 3% on the day
For the second week running the EIA crude oil inventory release has shown pretty much no change, in what is a pretty remarkable occurrence given the volatile nature of this release. For the past week stockpiles rose by just 7k, following on from a drop of 46k the week before. The consensus forecast was for a drop of 2.8M and with the release being both above this and also last night’s private API number (-4.5M) the initial reaction has been a pullback in the oil markets.
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Oil dropped fairly sharply after the release, with the market plunging 150 ticks in half an hour. Source: xStation
Looking more closely at the report there was some more negative reading in the subcomponents which are listed below in the format of actual vs expected unless otherwise stated:
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Gasoline: +6.9M vs +2.4M
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Distillates: +9.5M vs +1.1M
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Refinery utilisation; +2.1% vs +0.3%
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Cushing: +0.6M vs +0.8M
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US production: Unchanged at 11.7m bpd
This builds in Gasoline and Distillates in particular could be seen as negative but, these were also evident in the API readings last night so shouldn’t come as too much of a shock.
Looking at longer term charts, Oil is set to post a 4th consecutive daily gain even after the recent pullback following the data. Today’s high is not too far shy of the 23.6% fib of the larger decline at 58.79 and the confluence of this with prior support in late November could be seen to heighten its importance. The market has now bounced over $8 from the lows at 50.18 and this is now the main area to look to below as possible support. A clean break above 58.79 would open up the chance for a larger recovery with the 38.2% fib not coming in until 64.11 and representing the next level that fib traders would look to.
Oil has gained for the 4th day in a row and moved up near the 23.6% fib and possible resistance level around 58.79. Source: xStation
