Summary:

• DOE inventories fall to -2.4M vs -1.5M exp
• Drawdown smaller than last night’s API number however (-5.1M)
• Brent Oil pulls back from 2017 peak

The weekly DOE inventories have shown a decrease once more after last week’s unexpected surprise. A fall of 2.4M is larger than the consensus forecast for a drop of 1.5M and compared to last week’s build of 0.9M is a sign that US stockpiles may be set to resume their recent downtrend. 

 Brent has dipped back below the $61 handle despite a larger than expected draw. Source: xStation

However, there has been a noticeable correlation with the private API reading (released last night) and the market reaction to the public DOE number of late, with the earlier release often seeming to set the level of expectations for the latter. Along these lines, last nights drop in API inventories of 5.1M is significantly larger than today’s and could go some way to explaining the market reaction which has seen some initial selling in Oil, with Brent dropping back below the $61 handle. 

 The market has now handed back almost all of the gains seen since last night’s API number. Source: xStation

 Despite the recent weakness in the past hour or so the longer term picture for Brent remains unchanged with the market still in a clear uptrend after breaking out above 57.30 at the second time of asking towards the end of last month. 58.95 is a level to look for possible support before then whilst the today’s high at 61.69 – also the highest since July 2015 – is a possible resistance to keep an eye on. 

 Brent earlier hit its highest level since July 2015 at 61.69 and remains firmly in an uptrend. Source: xStation