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Oil surges on inventory drawdown 

Oil prices have soared higher this afternoon after the latest weekly inventory data from the US showed the biggest decline in over a month and only the fourth of 2016. After the sharp move lower experienced on Monday the resurgence in crude benchmarks, which have touched their highest levels of the week in the past hour has been remarkable. The price action is reminiscent of that seen following the large drop at the start of a week after the collapse of talks in Doha, and the yearly highs printed less than two weeks afterwards are now firmly in the cross hairs of the bulls. 

The headline number showed a decrease of 3.4M barrels in the past week compared to expectations of a small build of 0.1M. Considering last week we saw an increase of 2.8M and the scarcity with which we’ve seen declines of late further highlight the strength in oil that has been seen since the release.

European benchmarks are in negative territory on their cash close with the Dax (-1.10%) and Eurostoxx (-0.98%) having spent the majority of their days in the red. The FTSE (-0.03%) remains little changed at 6124 ahead of tomorrow’s BoE meeting. Stateside stocks are also lower after posting impressive gains yesterday, with the US500 (-0.31%) dropping back to 2070 on the European close. 

The biggest story of the session comes from crude with Brent (+3.72%) rallying strongly after the drawdown seen in US inventories. WTI (+3.21%) is also substantially higher and is trading with a $46 handle once more. Gold (+0.64%) is looking to recover some of the losses seen so far this week and the precious metal trades at $1273/oz at the time of writing.

In the FX space the US dollar is facing some selling with the EURUSD (+0.58%) moving higher and the USDJPY (-0.65%) declining. USDCAD (-0.50%) has also declined as the Canadian dollar appreciates on the rally in oil price. The Pound is a little softer across the board ahead of tomorrow’s rate decision with the EURGBP (+0.40%) reflecting this. 

Looking ahead there’s not much by the way of major economic releases overnight or tomorrow morning until midday when the Bank of England simultaneously release their rate decision, monetary policy summary, MPC voting pattern and quarterly inflation report. This is swiftly followed 45 minutes later by Governor Mark Carney conducting a press conference. Later in the afternoon we also get the weekly US initial jobless claims out at 13:30 

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