Demand worries overshadowed a drop in crude stocks after the Energy Information Administration (EIA) seemed to suggest refiners going into maintenance and a weakening demand for gasoline helped send the market higher.
A large draw in total U.S. crude oil stocks reported by the API late yesterday has resulted in a light round of short covering in a market that remains oversold. As of this morning the crude oil market is still in positive territory but well off of the overnight highs hit after the API data release as the industry awaits the more widely followed EIA oil inventory snapshot.
More signs of a slowdown in the Chinese economy may not be enough to overcome a potential slowdown in U.S. oil output. The preliminary Caixin/Markit China Manufacturing Purchasing Managers' Index fell to 47.0 in September, its lowest since March 2009 yet only down slightly from last month. The weakness was well telegraphed by other readings but how well telegraphed was the drop in U.S. oil inventories?
She's got the whole world in her hands, she's got the whole wide world in her hand, she's got the whole world in her hand... Fed Chair Janet Yellen and her band of merry men punted on raising interest rates mainly on concerns of low inflation and concerns about the global economic world.
Crude oil prices led stocks lower yesterday, but today are rebounding. There’s talk of lower U.S. output, stronger than expected demand in Asia and short covering ahead of the weekly inventory reports.
At the end of the day it is all about the end of the day. While crude oil prices trade below $40 a barrel in crisis market price levels, it's taking its cue from the beleaguered stock market that can't hang onto a rally.