Since Monday of this week, the oil price has been running in a kind of sideways trend. From today’s point of view, this can be formulated in this way. We already mentioned it on Tuesday. For days the oil market was flooded with news and jumped up and down. Then apparently the situation calmed down a little. Basically, we think that the overall situation speaks for a falling oil price. But please do not stick firmly to our assessment! Please always have your own opinion!
Oil price drops overnight
Tonight the WTI oil price fell from 53.27 to 52.75 Dollars. The reason for this was the API data for crude oil inventories in the USA published at 10:30 p.m. German time. They rose in the week comparison around 10,5 million Barrels (expectations lay with +2.8). A strong increase. It is as strong as it has not been since February 2017, at least in the API data. A sharp rise in crude oil inventories means that supply is rising, demand is falling, or both at the same time. So, of course, pressure is exerted on the price of oil, because more supply than demand basically causes prices to fall.
5:00 p.m. today will be very important
Normally they come on Wednesday, but on public holidays in the US, the state-reported oil stock data shifts by one day. That’s why the US Energy Agency EIA is releasing its official stock data today at 5pm German time. On the oil market there were already since beginning of the week assumptions that the stock quantities are announced strongly rising this week. The API data with its +10.5 million barrels consolidate this view. And so it is possible that the oil price is experiencing a slide this afternoon with strongly rising stock quantities. Because the declining price tonight was still limited with good 50 Cents. As an observer of the oil market we have already experienced much more violent movements in recent years.
If the official stock levels rise significantly this afternoon (it has been going up little by little for weeks), the oil price could break out of its range downwards. This can be seen in the right part of the following chart (WTI oil price trend since 7th of October). So, today at 5 pm will be a very important date for oil traders. We will then report immediately. Important to note is: In the first minutes after publication the ALGOS (computer programs) chase the oil price often inexplicably up and down. Therefore the very first reaction in the course is sometimes strange.