Oil recovers after smaller than forecast inventory build

Summary:

• Weekly crude oil inventories: +1.3M vs +1.9M exp

• Build also smaller than API (+2.5M)

• Oil remains range bound near key resistance close to $63.50

After trading lower for most of the day, there’s been an attempted recovery in the oil price with both Oil and Oil.WTI rallying after the release of the weekly crude oil inventories. The headline figure showed a 3rd consecutive rise, but the gain was smaller than the build seen in last night’s API and this has supported a recovery in the markets. The weekly crude oil inventories rose by 1.3M, against a consensus forecast of +1.9M and last night’s API which came in at +2.5M. For context, the prior reading was +0.9M.

Oil has rallied over 100 ticks since the release and is now probing Tuesday’s highs around the 62.75 mark. Source: xStation

In addition to the headline, the subcomponents of the report could be seen as mildly supportive of the Oil market with both Gasoline and Distillates lower than the expected and last night’s API equivalents.

• Gasoline: +0.5M vs +1.5M exp and +1.7M API

• Distillates: -2.3M vs -2.0M exp and +1.1M API

• Refinery utilisation: +0.6% vs -0.55% exp

• Production unchanged at 11.9 mbpd  

Little has changed from a longer term perspective for Oil, with the market in an uptrend according to the 8 and 21 EMAs and still close to a potentially key resistance. The region around $63.50 continues to be a hurdle too far for longs, with the latest intraday high of 63.65 now seen as possible key resistance. The market has moved back into the green after earlier falling to its lowest level of the week, but it needs to make a break above 63.65 before any significant longer term moves can occur.

The long awaited inverse head and shoulders formation remains a possibility for Oil, but price needs to break above the $63.65 level to break the neckline. Source: xStation