Weekly crude inventories: +7.1M vs +1.5M exp
Similar to API build but components show large draws
Oil.WTI trades above key support around $56 handle
A large build in the weekly crude oil inventory figures has pared the large drop seen last time out, but with a couple of the components printing large draws the overall impact is hard to ascertain clearly and this can be seen in a mixed market reaction. The headline build of 7.1M looks negative for price on the face of it compared to a consensus forecast for +1.2M and erases the majority of the drawdown of 8.6M seen last week, but it is actually not far from Tuesday’s API number (+7.3M).
The current level of inventories are relatively high compared to previous years and if they are a guide going forward, could be set for some seasonal upside in the weeks and months ahead. Source: XTB Macrobond
Furthermore, two of the subcomponents from the report showed sizable drops and this also takes the edge off the bearish headline number. Gasoline inventories fell by 4.2M against an expected 1.6M drop, while Distillates declined more than the 1M forecast in falling by 2.4M. Weekly production was unchanged at 12.1 mpbd.
Oil.WTI has see-sawed since the release, dipping lower and running higher but at the time of writing the market is little changed on the day. Price remains above a possible neckline in an inverted head and shoulders formation with the region around 55.25 seen as potentially key support. While the market remains above here the outlook is constructive and a break above 57.85 would pave the way for further gains. However, if this support zone is breached below then it would invalidate the formation and could lead to a pullback after what has been a stellar start to the year. The 8 and 21 EMAs are getting quite bunched and price currently sits in between them, so it wouldn’t take much downside for a death cross to form.
Oil.WTI is at a potentially pivotal point with support around 55.25 an obvious area of interest. Source: xStation