- DOE inventories post a surprise build of 2.2M
- US crude output also rises to highest weekly data since 1983
- Oil pulls back from recent highs
The weekly DOE inventories have shown an unexpected build in the headline reading with a rise of 2.2M against consensus forecasts for a -2.5M print. With a prior reading of -2.4M today’s number is clearly a shock to the upside and given that 4 of the last 5 readings had shown drawdowns a sizable rise could be seen as bearish for the oil price.
The Distillate and Gasoline number were mildly supportive of crude with both showing larger drops that expected. For distillate a reading of -3.4M was well below the -1.0M expected and it was a similar story for the gasoline inventories which fell by 3.3M vs -1.9M expected.
Whilst the aformentioned points from the report could be seen as offering a negative and positive force on the price of oil, a 3rd point is certainly negative. US crude output rose to 9.62M B/D which is the highest in weekly data since 1983.
The market reaction has seen a swift drop in the oil price with Brent falling back to the $63 handle and hitting its lowest level of the day following the release. Buyers have stepped in and defended this level however and it will be interesting to see whether the bears can make a push lower after a release that is negative for the oil price.
Brent Oil fell briefly below the $63 handle following the release but the market has attracted buyers and seen a bounce. Source: xStation
Longer term the market has pulled back a little after making a 2017 peak yesterday at 64.64. Price is clearly still in an uptrend but given the sharp rise seen in recent months a failure to take out potential resistance at 64.64 could see a pullback with 58.61 an area to look to for possible support.
Brent remains in a clear uptrend but the market has pulled back from its recent peak in recent trade. Source: xStation