Crude Oil Inventories Rise Unexpectedly
Crude oil dropped in the immediate aftermath of the latest official US
oil inventories report from the EIA as traders responded to the headline
build of 1.31 million barrels. Clearly this wrong-footed many
speculators who had expected to see another drawdown following last
week’s 3.41 million barrel decrease in US oil stocks. This is the second
time in as many weeks that the API has got it completely wrong. But the
other aspects of the oil report were not too bad at all. For a start,
oil production fell once again. What’s more, there were
larger-than-expected draws in distillates and – more importantly for
this time of the year – gasoline stocks as refineries processed more
crude now that the driving season is underway. Hence, WTI oil has not
exactly fallen off a cliff (yet).
From a technical point of view, WTI crude oil has reached the 61.8% Fibonacci retracement against the May 2015 high. Given the technical importance of this level and the fact that the RSI is suggesting oil prices are “overbought,” I wouldn’t be surprised if we were to see a pullback of some sort now even though today’s US oil report is not too negative.