WTI prices rose on Wednesday after the Energy Information Administration (EIA) said that U.S. crude inventories rose by 533,000 barrels in the last week to 448.5 million barrels. Analysts polled by Reuters were expecting a 1.2 million-barrel rise. The U.S. Energy Information Administration reported an oil inventory build of 500,000 barrels for the week to January 20. The latest change in inventories compared with two sizeable weekly builds—one of 8.4 million barrels for the second week of January and a 19-million-barrel one for the first week of the month. At 448.5 million barrels, crude oil inventories in the United States are 3 percent above the five-year average for this time of year. Fuels, meanwhile, showed mixed directions in inventory changes. In gasoline, the EIA estimated an inventory increase of 1.8 million barrels for the week to January 20, which compared with a build of 3.5 million barrels for the previous week. Gasoline production averaged 8.8 million barrels daily last week, which compared with 8.9 million barrels daily for the previous week. In middle distillates, the EIA estimated an inventory draw of 500,000 barrels for the week to January 20, which compared with a draw of 1.9 million barrels for the previous week. Middle distillate production last week declined slightly from 4.6 million bpd for the previous week. Crude oil prices, meanwhile, rose to the highest in seven weeks earlier this week before deflating somewhat, as traders took profit. On Monday, Brent crude hit $89 per barrel before retreating, suggesting expectations of a quick Chinese demand rebound remain strong. Aramco’s chief executive has predicted danger of oil shortages as demand rises faster than supply, and so has the International Energy Agency, forecasting a gap of some 900,000 bpd between demand and supply. The EIA data offset Tuesday’s report that showed U.S. business activity contracted in January for the seventh straight month, raising concerns about an economic slowdown. Traders are now looking forward to Thursday’s fourth-quarter U.S. Advanced GDP report. It is expected to show a gain of 2.6%, down from the previously reported 3.2%. And Fridays PCI deflater. From a day trader standpoint a print through $82.66 will signal a resumption of the uptrend. A move through $72.74 will change the main trend to down. The main range is $89.89 to $70.56. The market has been testing its retracement zone at $80.23 – $82.51 for nearly two-weeks. On the downside, the nearest support is a minor pivot at $77.70, followed by a short-term retracement zone at $76.61 – $75.18. Day trader reaction to the main 50% level at $80.23 is likely to determine the direction of the March WTI crude oil market early Thursday. A sustained move over $80.23 will indicate the presence of buyers. This could trigger an acceleration into a resistance cluster at $82.51 – $82.66. This is followed by a main top at $83.14. Taking out this level with strong volume could trigger an acceleration to the upside.
Aramco’s chief executive has predicted danger of oil shortages as demand rises faster than supply, and so has the International Energy Agency, forecasting a gap of some 900,000 bpd between demand and supply.
NN: Forget all this day trader hokum. This is a binary trade. Will China suck another 1 million barrels per day of oil out of the market? Do politicians steel top secret documents to blackmail their enemies and sell to their friends? The answer to both question is a overwhelming yes..