• DOE inventories come in at -1.5M
  • Headline print was higher than expected (-3.2M) and prior (-7.2M)
  • However lower than API last night

A decline of 1.5M barrels in the weekly DOE inventory release has not done enough to spark a recovery in the oil price following yesterday’s substantial declines. The drop itself is smaller than both the expected and prior prints which were -3.2M and -7.2M respectively. 

A closer look at some of the sub components of the report show some negative developments for the oil price. The cushing (0.0M vs -1.7M prior) and distillate (-0.2M vs -1.9M prior) numbers both supported the headline in showing marked increases and whilst the gasoline number (-2.5M vs -1.0M) did show a drop on balance the report is not really supportive of the oil price. 

2017 so far has shown the highest level of US inventories in recent years but there has now been 15 declines in the past 17 weeks (and one of the rises was by only 0.1M). This has meant that the level has now dropped below that seen in 2012 – the year that is the most comparable to the present in the past 6. 

link do file download link

 The level of US inventories year to date has now fallen below those seen in 2012 – the most comparable of the past 6 years

Given last night’s API number which showed a week on week rise of 1.8M  today’s release was isn’t totally bearish for the price of crude. The initial reaction has seen some weakness however and Oil.WTI (-0.02%) has fallen back to unchanged on the day after dropping back below the $49 handle. 

link do file download link

 Oil.WTI has dropped back below the $49 handle since the release.

On longer term charts the outlook for crude bulls has taken a turn for the worse this week with Tuesday seeing a large rejection candle. The day’s trade practically engulfed the prior 3 days of gains and there could now be another lower high formed going back to the start of the year. 

link do file download link

 The market may have made a lower high on longer term charts