Crude Oil inventories, as reported by the EIA, fell for the eighth straight week to its lowest level since January 2016 signalling strong demand for the commodity.
EIA said in its weekly report that oil inventories fell 3.3 million barrels for the week ending August 18, 2017, whereas gasoline stocks fell 1.22 million barrels, more than expectations of 0.64 million decline. Distillates were slightly higher by 0.02 million barrels in the reporting week. Imports rose 605,000 bpd whereas refinery runs dropped to 95.4 percent indicating a lack of demand as the summer season comes to an end. US production, the major reason behind the struggling market, rose 26,000 bpd to 9.53 mbpd which also damped the sentiment.
While the initial reaction to the data was mixed oil prices are recovering at the time of writing this. Crude oil futures are trading at Rs.3100, up 27 points or 0.90%. Recent price action indicates that prices are consolidating at current levels and we feel that a strong close above intraday resistance at Rs.3120 should bring the bulls back into the market and aim for price objectives at Rs.3200-Rs.3250 as we move into next week. On the downside, strong support comes into play at Rs.2980-Rs.3000 and a breakdown would negate the current upside and push for an extended period of downside in oil.
Source: Commodity OnlinePrevious Next
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