The pattern’s been the same for weeks. While the US stock market performed well thanks to optimism in the trade war with China, this was also fundamentally positive for the oil price. At the same time, this weakened the gold price. And this week? The Dow 30 has fallen 700 points since Friday evening. But the oil price did not participate in the downward movement as a whole. Yesterday’s losses were quickly compensated. The following chart shows the WTI oil price in blue since yesterday morning, and in red the Dow 30.
API data could push oil price only little
Then yesterday evening at 10:30 p.m. the privately collected API data for the crude oil inventories in the USA were published. According to the API, stocks are dropping by 3.7 million barrels. As a result, the WTI oil price rose by only 20 cents to 56.40 Dollars by midnight. This morning it was quoted at 56.33 Dollars. So the market cannot make a real profit from the declining API data. Don’t they trust the data? Because in the last weeks and months API was never a 100% safe indicator for the official government data, which are always reported one day later. For weeks now, we have been experiencing a steady build-up of official inventories. A minus of 3.7 million barrels also today at 4:30 pm, that would be something for the oil bulls! It’s a bet until this afternoon if you can trust the API data.
From tomorrow in OPEC mode
From tomorrow, the oil market will run in OPEC mode. Tomorrow afternoon or early evening at its official meeting in Vienna, OPEC will announce what it has decided to do. No change in the production reduction (then it expires in March 2020), a time extension, or an increase in the quantity of cuts? According to recent reports, some OPEC members are actually tending to extend the cuts in terms of quantity. It hasn’t looked like it recently. Has this fantasy been in the oil price for two days, and can it prevent it from slipping in parallel with the stock market? Less supply on the world market logically means less pressure on the oil price, which would tend to increase it more easily. But we know it as long-time observers of the OPEC meetings. In the days before, various oil ministers from the member countries like to chat a lot, and what other members supposedly think. Nothing is certain. From noon tomorrow, we will probably hear more concrete statements that will make things clearer. Today the appointment at 4:30 p.m. counts with the government inventories in the USA.