Welcome to Crude Oil Today, my brief look at what's happening in oil markets and what it might mean for prices.
As ever, feedback welcome
Oil was lower oernight even though the EIA reported a massive 5.8 million barrel build in inventories and a fresh record for US production. Key here was that traders found some good news in the gasoline and distillate stats. So, this morning WTI is up 1.18% at $68.91 while Brent is up 1% at $72.90.
US crude output hit 11 million bpd for the first time ever the Energy department said overnight.
That, along with with the big build in crude oil inventories would normally have been enough to see prices fall. But traders found some bullishness in the demand seen in gasoline and distillate numbers which showed falls in inventories of 3.2 million and 371,000 barrels respectively. They were both big misses to the downside relative to expectations.
So we ended up with a net bullish read on the inventory data which was supportive of prices for both WTI and Brent.
As Dennis Gartman is want to say, if a market doesn't react to bearish news - the headline Crude build - then perhps it's not a bear markets.
I've noted that and tempered my outlook a little as you'll see below.
But what's interesting going forward for oil, and something will really put the Iranians noses out of joint, is news that the JMMC (Joint Ministerial Monitoring Committee) is looking at compliance at a total level not country specific.
Bloomberg’s Javier Blas Tweeted overnight that, “JMMC committee is insisting #oil production is monitored as “overall” compliance with the output cut deal, rather than country individual levels (that’s going to make #Iran and Venezuela very unhappy as allows #SaudiArabia to grab market share). #OOTT”.
Indeed, that is exactly what this is.
The JMMC is effectively ignoring Iranian and Venezuelan objections and constraints in order that the Saudis and Russians ensure that enough oil gets to market to stop prices rocketing higher. It’s doesn’t necessarily mean that they’ll pump enough to drive prices sharply lower – that’s probably not their intent. But they know with all the uncertainty, to high prices might materially impact global growth and thus future demand. So they are trying to play the long game.
Price action wise though it looks like maybe Brent, and WTI, want to test higher before they fall again. This is particularly so for Brent which may wish to test the breakout of the uptrend channel.
On the day today the big release is Australian employment for June. The Reuters poll says the market is looking for an increase of 17,000 jobs and an unemployment rate of 5.4%. Australian data has improved a little recently. This is very important for the Aussie dollar and interest rate markets still grappling with exactly where households and consumers are at.
Retail sales in the UK will be important for forex traders and other than that it’s just jobless claims and the Philly Fed manufacturing index in the US.
Have a great day's trading.
Chief Market Strategist
The information provided here has been produced by third parties and does not reflect the opinion of AxiTrader. AxiTrader has reproduced the information without alteration or verification and does not represent that this material is accurate, current, or complete and it should not be relied upon as such. The Information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any particular trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted
Soaring US yields trigger the wrecking ball effect as yields become a source of volatility for risk, rather than a source of support