Skip to content

XTB TRADEBEAT

Large DOE build as Oil runs into resistance 

Summary:

  • DOE oil inventories: +6.2M vs +1.0M exp and +2.2M prior
  • Largest build since January but components mixed
  • Oil little changed after the release 

A larger than expected build in the weekly DOE inventory release has put some pressure on the oil price with Brent falling down to its lowest level of the day in the minutes following the release before recovering somewhat. Turning our attention to the figures themselves the headline reading showed a huge jump in rising to 6.2M from 2.2M last time out - far higher than the expected 1.0M.

link do file download link

 US Oil inventories rose and they remain fairly close to the 5-year average. Source: XTB Macrobond 

Last night’s API number served as a more accurate estimate and gave some warning of a large rise after it came in at 3.4M, but today’s data point was far higher. Looking at the individual components of the release it is on the whole a bit mixed with the gasoline figure  also a negative for price, but the distillates and production were more supportive:

  • Gasoline: +1.2M vs -0.5M exp
  • Distillates: -3.9M vs -1.5M exp
  • US Production 10.62m bpd vs 10.59m bpd

The production figure did show another increase overall, but the rise was relatively small and therefore could be seen to send a mixed signal rather than being a clear negative for the market. 

link do file download link

 Oil has run into pretty clear resistance in recent trade and could now be set to have a look lower. Source: xStation

The market reaction has seen a bit of a slide in the oil price, although the move has been fairly contained so far. Oil has dropped below $73 to trade at its lowest level of the week and there have been a couple of negative price developments in the recent price action. Yesterday saw a large bearish engulfing candle after Monday the market reached its highest level in 3 years and coming shortly after a similar formation last week, there is clear selling pressure overhead. 

 

Disclaimer

This article is provided for general information purposes only. Any opinions, analyses, prices or other content is provided for educational purposes and does not constitute investment advice or a recommendation. Any research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Any information provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk, we do not accept liability for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.