• Weekly DOE inventory change falls to -6.5M
  • Print was lower than the expected but above API
  •  Build in Gasoline stocks also mitigates impact of drop in headline 

The weekly crude oil inventories from the Department of Energy (DOE) showed a decline of 6.5M barrels in the headline reading, below both the -2.6M expected and the -1.5M seen previously. The drop makes it 6 in a row as far as declining inventories go and the overall level for 2017 has now fallen further below last year’s at the equivalent point in time. Inventories began the year with a steep rise, outstripping the levels seen in any of the past 5 years. However the recent run of declines saw the 2017 level fall below that in 2016 and this week’s release has seen a gap open up.

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 The level of US oil inventories in 2017 has now moved firmly below the equivalent point in time last year after a strong recent run of declines. Source: Macrobond, XTB Research

 Despite this drop in the headline DOE number the price of Oil has fallen in the 25 minutes since the release and this could be due to the relative rise in the figure when compared to last night’s API reading of -7.8M. Furthermore a closer look at the components in the report reveals a substantial increase in gasoline inventories compared to the consensus expectations. The weekly gasoline inventory change was +3.4M compared to a -1.5M expected and this further detracts from the drop in the headline reading. 

Looking at a chart of Oil.WTI the market is currently sat in between levels and despite the 45 tick drop seen since the DOE release price remains above a key support at 48.43. This level is the 23.6% fib retrcement of the rally from mid-June and this will have to be broken below before any substantial pullback can occur. On the upside the high of 50.38 could be seen as resistance, with a move above there paving the way for further gains and an extension to the upside.

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 Oil.WTI remains close to its recent high of 50.38. The market has fallen since the DOE release but bears will want to see a break below 48.43 before they can hope for a sustained decline. Source: xStation