- DOE inventories: -4.6M vs +1.4M exp
- Print not too different to last night’s API
- Oil pares earlier losses in immediate reaction
The weekly DOE inventories have shown a large decline of 4.6M barrels according to the latest data, which was well below the consensus forecast for +1.4M. What is more the decline is only the 2nd drop in the last 6 prints and the largest decrease since January. Unsurprisingly the initial reaction to the drop was positive with Brent Oil surging higher by around
Oil rallied around 80 points from the low to the high in the 30 mins following the DOE release. Source: xStation
However, upon further inspection the report may not have a lasting positive impact on the market. Looking more closely at the components the Cushing number was substantially higher (+3.7M vs +1.8M) whilst both Gasoline (-1.1M vs -1.5M) and Distillates (+0.5M vs -1.3M) also beat. Furthermore, the consensus forecast was taken from a survey earlier this week and often the API reading is a more accurate gauge as to what the market is really expecting.
Oil sits at an interesting level around 67.50 and tonight’s closing level may prove pivotal going forward. Source: xStation
Looking at a D1 chart today’s close may be seen as key with 67.50 a potentially pivotal line in the sand. The market had broken below here earlier but has since rallied on the DOE draw and a failure to end the day above here could put the pressure back on. Should price end the day above here then it may be seen as a false break and the market may move back towards the $70 handle once more. The 8 and 21 period EMAs have also converged and this adds to the importance of this level as a possible inflection point.