By Orbex
Crude oil prices came back under offer this week. This was despite the latest weekly update from the EIA showing a further drawdown in us crude stores.
The Energy Information Administration report showed that in the week ending September 18th, headline US crude inventories fell by 1.6 million barrels. This takes the total position to 494.4 million barrels, just 13% above the five-year average for this time of year.
The data shows that gasoline inventories fell by 4 million barrels last week, marking one of the largest weekly declines in months.
The reduction has taken total gasoline inventories down to just 1% above their five-year average for this time of year. Distillate stockpiles were also lower by 3.4 million barrels, falling back to 21% above their five-year average for this time of year.
The data also showed that US crude oil imports rose by 160k barrels per day last week. This took them up to 5.2 million barrels per day on average.
Free Reports:
Looking back across the last four weeks, US crude oil imports have averaged around 5.1 million barrels per day.
In terms of gauging demand, the total products supplied number was at 17.8 million barrels per day over the last four weeks.
This marks a 15.9% reduction on the same period last year.
Meanwhile, gasoline products supplied fell by 9% on the same period last year. They averaged 8.5 million barrels per day over the last four weeks.
The crude oil market has seen a shift in sentiment over recent weeks. The uptick in concerns over the global pandemic has started to weigh on oil prices as traders fear a rise in fresh lockdown measures over the coming months.
The latest set of manufacturing data out of the UK, the eurozone, and the US (released this week) were positive.
However, they have raised concerns over waning momentum in the economic recovery.
While the data releases were all in line with expectations, or mildly above, the firm increases of recent months were not seen over August.
With many countries deploying local lockdown measures, there has clearly been a loss of activity and traders are concerned that if further global lockdowns return in the coming months, this could drag oil demand lower as a result of the loss of activity.
The breakdown in crude oil prices over recent weeks has seen price moving back down below the 42.43 level. While price attempted to recover last week, the rally looks to have run out of steam now.
Price is at risk of establishing a lower high which would pave the way for a bigger reversal lower. The next big downside support level to watch is the 33.17 level.
By Orbex
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