Summary:
- US oil stocks decline more than expected
- US oil output rebounds after an unexpected decrease in the prior week
- Oil prices could continue rising towards $48
Oil prices are gaining momentum in the aftermath of the DoE report which showed that stocks declined 6.299mb which is much more than expected as the consensus had suggested a draw by around 2mb. However, a reaction in prices is not so tremendous due to yesterday’s API release which saw a decrease close to 6mb.
Besides, gasoline inventories went down 3.67mb while just 1.8mb had been estimated, whereas distillates stocks had a draw of 1.85mb whilst an increase by 0.5mb had been anticipated. Moreover, US oil output rebounded in the prior week from 9.25mb per day to 9.338mb per day. Previously we pointed out that a recent decline in production had been sparked just by temporary outages in Alaska. This time outturn fell there 3.9% w/w as well, it was outpaced by a pick-up by 1.2% w/w in remaining states though.
US oil stocks keep on declining and nearing levels seen in the prior year. Source: Bloomberg, XTB Research
Having looked at the chart above one could spot that a pace of declines in US stocks has gained momentum of late and if that trajectory is retained, it could push inventories below levels seen in 2016. As a result, it could act in favor of crude prices, at least in the short-term. Keep in mind that these falls stem from seasonality and much more important will be whether US oil stocks manage to decrease afterward.
Oil prices are increasing following the better than expected DoE report and after a rebound from a local support. Source: xStation5
Technically, WTI oil prices could go towards $48 where firmer resistance is placed. It’s worth underscoring that prices have respected a support located nearby $44.5 after revelations from Russia which came out yesterday.