The American Petroleum Institute (API), an industry group, reported a sharper-than-expected 2.1 million barrel rise in U.S. weekly crude stockpiles. As a result, hopes that the official data from the EIA would reveal a 1.3 million decrease – the first decline in two weeks – were dashed.
World stocks hit a new one-year high today, while the dollar and benchmark government bond yields sank and precious metals rose after weak U.S. productivity data again pushed back expectations of a Federal Reserve rate hike.
With concerns still elevated over a potential decline in demand amid slowing global growth, most upside gains observed in oil could be capped. The terrible combination of oversupply woes and fears that demand may be waning could provide a foundation for bears to send WTI crude to unseen levels.
In what is one of the quieter weeks on the economic data side, oil has once again taken the spotlight after WTI crude dipped briefly below $40 a barrel last week for the first time in almost four months. Oil entered into a bear market at the end of last month and even now remains just under 20% below its highs from June as oversupply continues once again resurfaced.
There are some that are laughing off the possibility of a production freeze because of the failure at Doha in April, but one must not just dismiss it. A deal at Doha was closer than anyone imagined and there is a possibility that they can put those pieces back together.