- DOE inventories -5.7M vs -4.7M exp and -2.7M prior
- However, Cushing and Distillate rise by more than expected
- Oil searches for direction close to 2017 peak
The weekly DOE inventory release has seen yet another drop in the weekly with the decline marking a 4th consecutive decrease. A reading of -5.7M is the second lowest in the past two months and further supports the notion that the excess crude supply in the US is slowly beginning to diminish. Against a consensus forecast of -4.7M and a prior reading of -2.7M the reading seems positive but when compared to last night’s API number of -7.1M the drawdown doesn’t appear as supportive.
A closer look at the components doesn’t provide much clarity as to the impact that the release will have on the oil price either. The distillate (0.5M vs -1.5M prior) numbers was higher than the previous but cushing (+0.2M vs +1.3M prior) declined sending somewhat mixed signals to the market. The initial reaction has been slightly negative with Brent Oil pulling back from its daily highs of 58.50 and briefly falling through the $58 handle.
The initial reaction has seen some weakness in the Oil price with Brent Oil falling below the $58 handle. Source: xStation
There has been limited follow-through thus far and without a clear signal from the report it remains to be seen whether price can make another attempt at 2017 highs of 58.86 or whether the latest move higher will be pared in the coming trade. 57.20 could be seen as key support and until this level is breached then the recent uptrend will remain in tact.
Brent Oil remains close to its YTD highs of 58.86. Source: xStation
Earlier there was some market chatter that OPEC is leaning towards a 9-month supply cut extension. The report cites four OPEC sources and said the decision may be postponed until early 2018 if the market is performing well when OPEC meets. This caused the earlier push higher in price and the upcoming OPEC meeting on November the 30th remains a potentially major event for the price of crude.