A slightly smaller than expected drawdown in the weekly inventory data from the US has been met with disdain from oil traders as Brent has dropped more than 100 ticks in the past half an hour. The headline reading showed a drop of 1.7M barrels compared to forecasts of -2.4M and despite begin lower than last night’s API this was not enough to attract buyers into the market.
There seemingly remains a glut of oil in the market and despite OPEC’s best efforts to curb production, inventory levels in the US are higher than recent years. Below are 4 charts which describe the current level of inventories, the relationship between inventories and Oil.WTI and the market reaction to the release.
On a weekly basis US inventories so far this year remain higher than any individual year since 2012
The inverse relationship between WTI and inventories is fairly strong with the US benchmark for oil falling as inventories rise. Note the left hand axis is inverted so higher inventories are represented by a lower blue line.
In terms of market reaction There has been a sharp drop in Oil.WTI with the market falling around 140 ticks in the past 30 minutes.
On a longer term chart today’s low marks the second lowest level of the year after falling below the $45 handle. Longer term the region around 43.75 has offered support and this also marks the 2017 low.