Oil waiting on inventories as EIA says production outpaced consumption

Quote of the Day

I do not think there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything else, even nature.

John D. Rockefeller

Another variable hits a stimulus supported developed world economy today… the U.K. The Bank of England is no longer promising lower rates forever as it has announced it is linking its QE program to the unemployment rate much like the U.S. The BOE is pledging to keep its benchmark interest rate and bond purchase program at current levels until the UK’s jobless rate falls to 7%. Equity markets have been digesting the BOE comments from a bearish perspective with most all global equity market lower as of this writing. Currently in the equity sentiment mix is the latest industrial output increase in Germany today. This is another indication that the EU recession may possibly be starting to form a bottom.

On the other hand oil prices (NYMEX:CLU13) have been able to remain in positive territory for the session so far as the market viewed last night’s API report as biased to the bullish side. The report showed a large decline in crude oil stocks and yet another significant decline in Cushing crude oil inventories. The Brent/WTI spread has moved back to the defensive after a light round of short covering during Tuesday’s trading session. The spread remains in a trading range bounded by parity on the support side and around $2.50/bbl on the resistance side.

Not only are Cushing stocks still in a strong declining pattern but North Sea production is returning after maintenance with no issues. However, there is still further maintenance work to be done in the North Sea, which should serve to keep the spread from narrowing strongly in the short term.

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