Summary:

• DOE inventories 1.8M vs 2.8M exp and 1.9M prior
• Last night’s API figures showed a build of 3.9M
• Oil price attempting to recover after hitting 2-month low yesterday

A smaller than expected rise in the weekly DOE inventories has seen the price of Oil move higher this afternoon as Brent crude attempts to recover after the market fell to its lowest level in 2 months yesterday. The headline figure showed a rise of 1.8M in the latest DOE release which was notably lower than the 2.8M expected and also marginally below the prior drop of 1.9M.

 Brent Oil has spiked higher by more than 100 ticks in the last half hour since the DOE release. Source: xStation

Perhaps the most positive aspect of the data comes when compared to last night’s API reading, with the private number often usurping both the consensus forecast and prior reading in putting the DOE release into perspective. The API showed a build of 3.9M which was well above its own prior reading of 1.1M and may well have skewed market expectations higher for today’s release. 

One potential negative which should be noted is that the US oil production increased once more int he past week, rising to 10.27M bd from 10.25M bpd previously. 

Looking at a daily chart we can see that the market is currently higher on the day and looking to post a daily gain for only the second time in nine sessions. Last week saw one of the largest weekly drops of recent years but this week has been less volatile as price has consolidated. The market now appears to be back inside the 61.25-64.71 range that contained price for around 6 weeks at the back end of the year and a break outside of this range could lead to the next sustained move. 

 Oil has returned to the range seen at the end of last year from 61.25-64.71 after large recent declines. Source: xStation