Summary:

• DOE crude oil inventories: +3.3M vs -4.6M prior
• Increase similar to last night’s API reading of 1.8M
• Brent Oil hits 3-year high on Syrian tensions

The latest inventory data from the US has shown a fairly sizable build after last week’s large drop, but the Oil price seems to have paid little notice and has since rallied above the $72 handle – its highest level since December 2014. Compared to last week’s decline of 4.6M today’s print of +3.3M is far higher, but it should be pointed out that this is not too much above last night’s API reading of +1.8M. Overall, inventories have been relatively high of late with the seasonal pattern of rising stockpiles around this time of year holding true once more. 

 Brent dipped intially on the release but subsequently set off on a very strong move to the upside. Source: xStation

The initial market reaction saw price fall lower on the increase, but this dip was short lived with longs rushing into the market and pushing price back higher. Whilst a higher than expected DOE number could be seen as negative for oil, it pales into insignificance compared to the current situation in Syria. Any supply disruptions in the Middle East would prove strong positive for the oil price and with US and Russia tensions rising, two of the biggest oil producers could be set to go head-to-head. 

The longer term picture is increasingly positive for the oil price, with Brent taking out recent resistance this week around 70.80 and rallying to levels not seen since December 2014. The weekly chart reveals that the market is clearly in an uptrend of late and whilst there remains some challenges such as the rising level of US inventory and the elevated level of speculative longs the path of least resistance appears to be higher.  

 

 Brent has hit its highest level in over 3 years this afternoon as the Syria situation has seen the market surge higher. Source: xStation