Oil Tumbles To 3 Week Lows After Unexpectedly Large Inventory Build

Having closed below $50 for the first time in 3 weeks, WTI Crude extended its losses to 3 week lows after API reported crude inventories rose by a bigger than expected 4.8mm barrels (more than double the 2mm expectation). Cushing inventories drew down by the most since Feb 2014 (we suspect the spillage was the driver), Gasoline inventories built notably despite expectaions of a sizable draw, and distillates inventories drew down for the 5th straight week.

US Futures, Global Stocks, Metals Rise On Economic Confidence, Upbeat Earnings

European, Asian stocks and S&P futures are all up again in early trading, a repeat of the Monday session, buoyed by a generally upbeat corporate earnings season, rising economic confidence and signs of improvement in the world’s biggest economies. After Charles Evans' hawkish comments on Monday, the market is now pricing in a 71% chance of a rate increase this year, up from 68% last week.

Venezuela Escapes Bankruptcy… But Oil Production Continues To Plunge

Venezuela just dodged a bullet, pulling off a last minute bond swap with creditors. The deal only buys Venezuela a little bit of breathing room, and a default at some point next year or the year after is not out of the question. Either way, the South American OPEC nation’s oil production is falling and will only continue on a downward trajectory.

5 Negative Factors For Oil Prices

With the value of crude oil price forecasting firmly established (as practically worthless), we will continue to monitor the global crude oil market to assess how events and trends will be impacting the crude oil price. At present we are bearish for crude oil, as we believe the following factors will be driving the oil prices in the short to medium term.

Nigeria Slashes Oil Prices, Admits There Is A "Huge" Cargo Glut

Nigeria National Petroleum Corporation lowered by at least $1 a barrel its official selling prices (OSPs) for 20 out of 26 oil grades. Qua Iboe, Nigeria’s largest export crude under normal circumstances, was reduced by the most since 2014.  The reason for the dramatic price cuts according NNPC, the state oil company, is a  “huge cargo overhang" as the country attempts to regain market share.

East Vs. West Division Is About The Dollar - Not Nuclear War

The narrative of a coming conflict between the East and the West has been boiling steadily as the U.S. election nears its end. Even the mainstream media is insinuating the potential for shots fired. Some believe the results of the election will determine the odds of war. There is a different position. It seems the rhetoric of East vs. West and nuclear exchange is being exploited as a distraction away from a different but almost equally catastrophic end game - the death of the U.S. dollar as the world reserve currency.

'Subtle Forward Guidance' - Trying To Fool The Marginal Oil Investor Everything's Under Control

So-called "forward guidance" is aimed at trying to fool the marginal investor into believing “there is no need for worry, central bankers have everything under control”. Unsurprisingly, as with all psychological conditioning, forward guidance has lost its effect as more and more market participants lose confidence in central banks and their promise that everything will eventually mean revert to happier days... However, this unfortunate practice is making in-roads into the most important of commodity markets: crude oil.

WTI Crude Spikes After Major Crude Inventory Draw Trumps Production Increase

Oil held gains overnight following API's surprise crude inventory draw, DOE data surprised even more with a massive 5.247mm draw (2.1mm build exp). Cushing saw the biggest draw in 6 months but we note that Gasoline inventories rose 2.469mm barrels - the biggest build since Feb. Production rose very modestly but hovers around the 8.5mm b/d level. WTI is spiking and RBOB lagging after the print.

US Futures, Global Stocks Mixed After Lackluster Chinese Economic Data; Oil Rises Over $51

US futures were little changed, with European shares lower, and Asian stocks higher as caution returned after last night's Chinese economic data did little to clear up how the world's second largest economy is performing, and provided few positives for investors ahead of the third and final U.S. presidential debate; imminent announcements from both the ECB and the Fed also will keep traders on their toes today.

WTI Surges Above $51 After Unexpected Crude Inventory Draw

Seasonally, expectations are for continued builds in inventories (following last week's biggest build in 6 months) but API reported a massive 3.8mm drawdown (against 2.1mm build expectations) sending WTI prices soaring. Distillates also saw a notable draw as Gasoline built modestly. Cushing saw the biggest draw since Feb 2014.

Can The Market Hang On To Support Here?

It is critical for the markets to “hang on” to current support at the previous breakout highs. A failure to do so will put the markets back into the previous trading range that has existed going back to 2014.