- Weekly DOE inventories decline by 3.3M
- 18th drop seen in the past 20 releases but US production increases
- Oil.WTI remains in consolidation
The biggest economic release of the week for Oil traders has shown yet another decline in DOE inventories, with a drop of 3.3M announced this afternoon. The decline was inline with the expectations – an extremely rare event in itself – and also not too dissimilar to last night’s API reading of -3.6M.
The release showed a continuation of the recent trend of declines which has seen an incredible 18 drops in the headline reading in the past 20 weeks. This has caused the overall inventory level to normalise after earlier in 2017 rising to elevated levels compared to recent years.
US inventories have consistently declined in recent months to bring them back from their extreme highs seen earlier this year. Source: XTB Macrobond
Looking at the individual components of the release the overall picture is one that should be supportive of price with Distillate, Cushing and Gasoline inventories all dropping from their previous readings. Once slight counterweight however is the rise in US oil production with an increase of 26kbpd. Whilst this is fairly small it does show that output is on the rise and takes the edge off the otherwise positive release.
OIL.WTI has traded in an increasingly narrow range in recent session with today currently marking the 4th successive inside candle on D1. This is all the more surprising given the sharp rise seen on Friday. This latest consolidation in fact appears to be part of a larger period that has seen the trading range narrow. The market has the feel that it is coiling ahead of the next big move, with arguments to be made for both the long and short side.
Oil.WTI has seen its trading range narrow in recent weeks. This could be a sign the market is coiling ahead of its next big move. Source: xStation