IGI Securities Limited – Commodity News

Karachi, March 28, 2019 (PPI-OT): Crude Oil

Technical

The WTI Crude Oil market fell a bit during the trading session yesterday, as it got a surprise build in inventory numbers in America. This is bearish for crude oil, but more importantly it has the massive resistance at the $60 level that has been such a major place of interest in this market. If it can break above the top of the candle stick for the last couple of days, then it can continue to go towards $65. Brent markets have rallied a bit during the trading session initially yesterday only to turn around and fall towards the $67 level. The 200 day EMA is sitting right in that area, and it would anticipated that there should be buyers underneath. Beyond that, the 50 day EMA sits underneath the $65.50 handle. The US dollar that could also influence oil markets as well, because if it starts to fall then it might get a bit of that “knock on effect” that commodities follow from the currency markets.

Highlights

Crude oil prices fell slightly after the EIA reported a moderate build in U.S crude oil inventories for the week to March 22

Oil prices have risen more than 25 percent this year

Crude exports marked lower by 506,000 barrels per day

A surprise drop in refining activity has translated into an unexpected build to crude inventories

Refineries last week processed 15.8 million barrels of crude daily, compared to 16.2 million bpd a week earlier

Fundamentals

Oil prices fell yesterday after government data showed U.S crude stockpiles unexpectedly rose last week, though disruptions to Venezuela’s crude exports limited losses.

U.S West Texas Intermediate crude futures settled 53 cents lower at $59.41 per barrel, posting a nearly 1 percent loss yesterday. International benchmark Brent crude fell 14 cents at $67.83.

U.S crude inventories rose last week by 2.8 million barrels, compared with analysts’ expectations for a decrease of 1.2 million barrels, the U.S Energy Information Administration said.

Oil prices have rebounded roughly 30 percent from 2018 lows, supported by supply curbs by the Organization of the Petroleum Exporting Countries and other major producers, along with U.S sanctions on exports from Venezuela and Iran.

Oil output from Russia, OPEC’s biggest non-member ally, averaged 11.3 million barrels per day so far in March, sources said, compared with 11.34 million barrels each day the previous month.

Gasoline production averaged 9.7 million bpd last week, from 9.9 million bpd in the week before. Gasoline inventories fell by 2.9 million barrels, after a draw of 4.6 million barrels in the previous week.

Distillate fuel production averaged 4.9 million bpd last week, virtually unchanged on the week. Distillate fuel inventories fell by 2.1 million barrels. Supplies of gasoline fell by 2.9 million barrels, while distillates declined by 2.1 million barrels last week.

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