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XTB TRADEBEAT

DOE rises by most in 6 months; oil remains near weekly highs

Summary:

  • Weekly DOE inventories rise by 5.9M 
  • Largest increase in stock piles since March
  • Oil.WTI remains higher on the day

A big jump in the weekly DOE crude oil inventory change has had a limited impact on the price of oil, with Oil.WTI remaining supported and just below the $49 handle. US stock piles rose by 5.9M over the past 7 days, compared to an expected rise of 4.1M against a prior print of 4.6M.

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 After a protracted period of declines, US oil inventories have risen in each of the last 2 weeks. This is largely due to Hurricane Harvey and Irma. Source: XTB Macrobond 

The rise, which is the largest since March, can likely be attributed to a drop in refinery demand following the damage caused by Hurricanes Harvey and Irma. This knowledge could go some way to explain the relatively muted reaction in the market to the large build, and a closer look at the report reveals that some of the components were also not particularly negative for crude.

The Distillate number fell to -3.2M from -1.4M previously and the gasoline inventory change revealed a massive drop of 8.4M. Again, this decline in the gasoline number could be seen to be caused by a lower level of output from refineries that create the product.

The initial reaction has been somewhat mixed with large wicks seen on recent M5 candles. This shows that attempted moves away from the current level have been parried back and there is yet to be a clear direction following the release.  

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 The release has yet to cause a clear move in Oil.WTI. Source: xStation

From a daily perspective Oil.WTI has risen in each of the last 3 sessions after experiencing a sharp decline on Friday. This may be explained by traders shorting the market ahead of the weekend when Irma was due to hit the US for fear of further damage to the already reduced refinery capacity. With early estimates of the storm damage being not as bad as feared we’ve seen a recovery in price this week but the market remains below what could be seen as key resistance at 49.40. As for support, keep a keen eye on the rising trendline from the August low.  

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 OIL.WTI is higher on the week, perhaps due to the damage from Hurricane Irma not being as severe as initially feared. Source: xStation

  

 

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