Oil rises despite another huge DOE build

Summary:

  • Weekly DOE inventories: +7.0M vs +2.5M exp

  • Huge Gasoline drawdown similar to API

  • Oil pushing back higher since the release

 

For the second week running the DOE inventory release showed a major build, with a weekly increase of 7M well above the 2.5M expected. Last week’s release showed a rise of 7.2M. Tuesday’s API numbers showed a rise of 4.0M for the headline.The subcomponents are as follows:

 
  • Gasoline: -7.7M vs -2.2M exp

  • Distillates: -0.1M vs -1.1M exp

  • Refinery utilisation; +1.1% vs +1.0% exp

  • Production: 12.2M vs 12.2M prior

Oil inventories are now just back above the 5-year average after large successive builds. Source: XTB Macrobond

 

An interesting aspect of this data point is the especially large drop in gasoline inventories which mirrored the API figures. The API reading of -7.1M for Gasoline was close to the DOE equivalent of -7.7M with the former being the largest drop since September 2017.

Gasoline inventories dropped sharply in the last week and this has clearly taken the edge off the large build in the headline. Source: XTB Macrobond

 

Brent crude (Oil on xStation) has made a new 2019 high this afternoon as the market seems to have looked through the large build in the headline DOE number. Price continues to extend higher and break through the Fib level with the move above the 50% last week, the most recent example. The 61.8% fib can be found at 72.88 and may be seen as the next level to look to above if the rally persists.  

 

Brent Oil has reached a new YTD peak this afternoon despite the large build in the DOE number. The market is now approaching the 61.8% fib at 72.88. Source: xStation

 

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