Oil bullish ahead of Fed on projected declining stocks

Global equities added value ahead of today’s U.S. Fed meeting outcome. The EMI Global Equity Index increased by 0.2% resulting in the year to date gain widening to 0.9%. The Index is still showing a gain that is closer to the lowest level of the year and well off of the highs of the year. The developed world bourses continue to dominate the Index as most of those countries are still in the midst of very easy monetary policies as well as large QE programs that are driving the equities sector. Over the last 24 hours, global equity markets have been a mild supportive price driver for the oil complex.

Tuesday's API report was mostly bullish with across the board declines in oil stocks. Total crude oil stocks decreased modestly by more than the range of projections from the industry. The API reported a surprise draw in gasoline and distillate fuel along with a draw in crude oil that was within the range of expectations. Total inventories of crude oil and refined products decreased on the week.

The oil complex is mixed as of this writing heading into the EIA oil inventory report to be released at 10:30 AM EST Wednesday. The market is usually cautious on trading on the API report and prefers to wait for the more widely watched EIA report due out this morning. Crude oil stocks decreased by 2.5 million barrels.  On the week gasoline stocks decreased by about 0.5 million barrels while distillate fuel stocks decreased by about 0.4 million barrels.  

The API reported Cushing crude oil stocks decreased by 817,000 barrels for the second weekly draw in the last two months. The API and EIA have been very much in sync on Cushing crude oil stocks, and as such we should see a similar draw in Cushing in the EIA report. Directionally it is bearish for the Brent/WTI spread.

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