Bears Take Control on Inventory Build, Potential SPR Release

Crude Oil, EIA, OPEC, US Vitality Coverage, Refinery Capability – Speaking Factors

  • Crude oil costs drop in a single day after US power coverage information, stock construct
  • Demand-side woes construct after US GDP progress forecast obtained a downgrade
  • Crude costs break under July swing excessive as bears take management of worth motion

Crude oil fell almost 2% in a single day after EIA knowledge confirmed a shock stock construct. That’s the greatest drop since September 20, though costs stay on monitor to report a seventh weekly achieve. Stock knowledge from the Vitality Info Administration (EIA) confirmed US crude oil shares rose by 2.346 million barrels for the week ending October 1. Analysts anticipated the information to indicate a draw of almost half 1,000,000 barrels, in accordance with a Bloomberg survey.

A Monetary Occasions report eased provide issues additional. US Vitality Secretary Jennifer Granholm offered a number of methods to cull rising oil costs, together with releasing oil from the Strategic Petroleum Reserve (SPR) and limiting oil exports, in accordance with the FT’s reporting. Excessive power costs have been a political headwind for the Biden administration. Gasoline costs are close to 7-year highs, pressuring customers already pressured by rising costs elsewhere.

Crude oil costs have risen on rosy financial progress forecast as vaccination campaigns began earlier this yr. These forecasts stay wholesome, though the Covid Delta variant has dragged on expectations lately. US third-quarter actual GDP progress was downgraded from 2.3% to 1.3% this week, in accordance with the Federal Reserve Financial institution of Atlanta’s GDPNow. If different high-profile progress forecasts present comparable tapering, it might begin to weigh on crude oil’s optimistic demand-side outlook.

OPEC is somewhat bullish in its demand outlook, with the cartel’s newest annual report displaying strong long-term demand will increase. Earlier this week, OPEC+ opted to extend oil provide in November by 400k barrels a day. Some analysts anticipated a rise of as much as 800k barrels a day given the latest worth features. The group’s personal issues over progress seemingly weighed. Furthermore, a preemptive strike in opposition to US power coverage could have additionally been a driving pressure behind the choice, given the group’s political prowess.

The US non-farm payrolls report is the following potential catalyst for crude oil costs. Analysts anticipate to see 500k jobs added in September, in accordance with a Bloomberg survey. A greater-than-expected determine would bode nicely for progress forecasts, probably supporting costs. In the meantime, US refinery capability continues to rise towards pre-Hurricane Ida ranges. The upper capability is way wanted amid increased gasoline costs. Total, costs could have extra draw back to go as merchants stay laser-focused on US power coverage strikes.

crude oil, refinery capacity

Crude Oil Technical Forecast

Crude oil costs are shifting decrease via the APAC session, a breach under the July swing excessive at 76.98 – which was the 2021 excessive previous to this week. The rising 9-day Exponential Shifting Common (EMA) could present help if weak spot continues. Bulls should retake 76.98 earlier than dialing again in on the 80 psychological deal with.

Crude Oil Every day Chart

crude oil chart

Chart created with TradingView

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the feedback part under or @FxWestwateron Twitter


Leave a Reply

Your email address will not be published. Required fields are marked *