Crude Oil Inventories Rise Unexpectedly

Crude Oil Inventories Rise Unexpectedly

18 May 2016, 17:57
Roberto Jacobs
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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.


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