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Oil erases part of gains after huge inventory build

Oil is trading higher today thanks to concerns over the impact of the Venezuelan crisis. Apart from that, news that Saudi Arabia is aiming to deliver more decisive output cuts starting from March and that Russia is supporting gradual output curbs helped prices move even higher. However, the key point in today’s calendar relating to oil was, of course, DOE report on oil inventories.

Level of the US oil inventories is still significantly above the 5-year average. Moreover, stockpiles should continue to rise over the next two or three months. Source: Bloomberg, XTB Research

Markets expected that the US Department of Energy will report a build of 2.7 million barrels in crude stockpiles. The actual report showed a build of 3.6 million barrels missing estimate by quite a huge margin. The reading also diverged from API’s estimates published yesterday which showed 1 million barrel drop. In turn Brent erased a part of today’s surge and crawled back into the resistance zone ranging around $63 handle. Other components of DOE report:

  • Distillate inventories change: +1.187 mb, expected: -1.484 mb

  • Gasoline inventories change: +408 k, expected: +1013 k

  • Cushing oil inventories: +3.633 mb

You can find more news on commodities in our Commodity Wrap that we have published earlier.

Brent (OIL) was trying to make a decisive push above the resistance zone ranging around $63 handle for the past month. Break above occured today but negative for prices change in the oil inventories pushed commodity price back below. Direction of future price moves may be dependant on whether today’s candlestick closes above the aforementioned zone or not. Source: Bloomberg

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