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Oil jumped further on positive API inventory report

calendar 16/09/2020 - 10:13 UTC

Overall, oil plunged almost -13.59% in the last two weeks and made a 3-months low of 36.13 on renewed worries about the elusive rebalancing after both the EIA and API reported an unexpected rise in U.S. crude oil stockpiles, as refineries slowly returned to operations after major storms hit the Gulf of Mexico recently.

Last Wednesday, the EIA data estimated that US oil inventories rose by +2.03 mbpd in the week to September 4th, the first weekly rise in seven weeks. Meantime, the API report, released earlier also pointed crude stockpiles rose by +3.00 mbpd.

But on early EU Wednesday (16th Sep), oil further jumped almost +2.70% and made a high of 39.38 on an unexpected inventory drawdown report from API:

 

 

Overall, apart from gasoline, all the other three components were in drawdown mode as the peak of the U.S. summer driving season is over. Moreover, U.S. refiners had ramped up processing ahead of Hurricane Sally and scheduled maintenance shut down, resulting in substantial crude oil drawdown and resultant gasoline buildup. Now all the focus will be on the EIA oil inventory report; if it shows a significantly higher drawdown from the API estimates, the oil will jump further; otherwise, it may again correct to some extent.

Bottom line:

The short term rally in oil may be over amid slower demand, especially subdued transportation sector and potential higher supplies from U.S., Mexico, Iran, Iraq, and Libya.

Technical view-Oil/WTI-Sep Exp:

 

 

 

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