Oil surges as DOE report shows biggest stockpile drop since 2016

Summary:
- Crude oil stockpiles dropped 12.79 million barrels
- Distillates and gasoline inventories also experience major decline
- WTI prints new daily high in a knee-jerk move

The US Department of Energy released its weekly stockpiles report at 3:30 pm BST. Market expected a drop of 2.84 mb but following yesterday’s API reading (-7.55 mb) bar of expectations was raised. Nevertheless, the official government report did not disappoint. The 12.79 mb decline reported for the past week was the biggest one-week drop since Q3 2016. Distillate inventories decline 2.441 mb while the market expected an increase of 0.17 mb. Gasoline stockpiles were expected to drop by 330k but the report showed a drop of 996k. It should not come as a surprise that oil surged in the aftermath of the release. WTI (OIL.WTI) is trading slightly below $60 dollar handle after the release while Brent (OIL) moved above the $65.50 handle.

Oil inventories saw a steep decline last week. Nevertheless, stockpiles are still significantly above the 5-year average. Source: Bloomberg, XTB Research

OIL.WTI surged in the aftermath of the DOE release and printed new daily high at $59.92. The commodity is trading over 3% higher on the day. Source: xStation5