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Oil pops higher on unexpected DOE drop

Summary:

  • DOE inventories -1.6M vs 2.2M exp
  • First decline in 4 weeks boosts the oil price
  • Oil hits highest level in 2 weeks following surprise DOE drop

The latest inventory figures from the department of energy have given the oil price a boost with Brent rallying to its highest level since the beginning of the month. The weekly reading showed the first decline in 4 weeks with a print of -1.6M and against consensus forecasts for 2.2M this is clearly a positive surprise for the market. 

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 Oil has rallied around 100 ticks in less than 30 minutes since the DOE release. Source: xStation

A closer look at the components reveals more good news for oil bulls with the Distillate and Cushing inventories both showing sizable drops. The Distillate came in at -2.4M vs -1.2M exp and a prior reading of -0.5M whilst the Cushing showed -2.7M with a previous reading of -3.6M.  

Taking a longer term view of today’s trade the market could be set for a large outside day with the daily range seeing an expansion to the upside. Earlier price had a look at breaking lower but prior support around 64.40 held once more and the subsequent rally has engulfed the entire week’s trade. The market has also moved above the 21 day EMA for the first time in 3 weeks and whilst the 8 remains below the 21, if price continues to rise much more then a bullish cross may lie ahead.  

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 Oil could be set for a big daily gain as the market has reacted positively to the latest DOE report. Source: xStation

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