Overnight Crude Inventory numbers pulled the rug out from under the feet of the oil rally. The surprise jump of 1.6 million barrels against an expected drop of 400,000 barrels was at odds with the API’s 1.8 million drawdowns on Tuesday.
Both Brent and WTI immediately gave up all the day’s gains to finish down around 0.50% on the day. The oil market also seems to have ignored the equity markets lead regarding the FOMC minutes. Last night, the committee discussed the start of running down the Federal Reserve’s balance sheet this year. This may imply higher rates which are unlikely to be supportive of oil, no matter what OPEC does.
Once this is digested, we may have seen the best of the oil rally in the short term. Brent spot has immediate resistance at $55.00 a barrel in Asia with support at $53.50. WTI spot has resistance today at $51.60, the overnight high, with support just below its current level at $50.40 and then $49.50.
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