Inventories Wrong-foot Crude

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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Jeffrey Halley

Jeffrey Halley

Senior Market Analyst - Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia and the New York Times. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley