Summary:

• DOE inventories -1.9M vs -2.2M expected
• Yesterday’s API showed a -6.4M print
• Oil.WTI drops to its lowest levels of the day post release

Despite seeing a first drawdown in 3 weeks, the DOE inventory release has seen some declines in the oil price with WTI falling to its lowest level of the day. A reading of -1.9M comes after two similar size rises in recent weeks and the number is also lower than the -1.4M expected by the consensus – the previous reading was 1.9M.

Longer term the prevailing drop in US inventories looks like it remains in play. After surging higher at the start of the year the inventory level peaked around the end of Q1 and has been showing a fairly steady decline since. The level is currently below the equivalent period last year and not far from it in 2015. 

 Oil inventories continued lower in line with the prevailing trend. The current level is lower than last year but remains above every other year since 2012. Source: XTB Macrobond

However, given that last night’s API came in at -6.4M the reading could be seen as not that favourable for the oil price. Furthermore the distillate component reported a rise of 0.3M against an expected drop of 1.0M and this could also explain some of the negative reaction we’ve seen in the minutes following the release. 

 Oil.WTI has dropped lower following the release but remains above the level it traded ahead of last night’s API. Source: xStation

A technical overview of Oil.WTI can be found here.