- Weekly DOE inventories increase by 4.6M
- Largest increase since March, but expected due to refinery outage after Harvey
- Oil.WTI remains above $49 and close to 1-month high
A larger than expected build in the weekly DOE inventory release has had minimal negative impact on the oil price with traders seemingly rejecting the bearish data due to the knowledge that this increase was expected after the damage cause by hurricane Harvey last week.
A rise to +4.6M in the headline reading marks the biggest increase in almost 6 months, but this number was only marginally higher than the +4.1M expected. Furthermore news in recent days that several refineries are ahead of schedule in resuming operations after the damage wreaked by the hurricane has caused many to believe that there won’t be a long term dip in demand for oil as a result of the storm.
A closer look at the components of the report also takes the edge off the negativity with notable declines seen in the distillate and gasoline stocks. US oil production showed a sharp decline of 7.9% in the past week, reflecting the damage caused by hurricane Harvey.
Oil.WTI has risen in recent days and recouped most of the last decline. Source: xStation
The outlook for Oil.WTI remains fairly positive with price now having retraced 78.6% of the latest decline after hitting 49.25 yesterday. A break and close above this level would expose 50.20 and a move above there could lead to the sequence of lower highs and lower lows that has been in place all year being negated.
Oil.WTI has made a sequence of lower highs (LH) and lower lows (LL) since the start of the year. Source: xStation