The EIA Summary of Weekly Petroleum Data for the Week Ending April 28, 2017 showed U.S. commercial crude oil inventories only decreased by 0.9 mill barrels from the previous week compared with the anticipated drop of around 2 mill barrels. At 527.8 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 0.2 million barrels last week, and are also near the upper limit of the average range.
U.S. crude oil imports averaged about 8.3 million barrels per day last week, which is down by 648,000 barrels per day from the previous week. But over the last four weeks, crude oil imports averaged over 8.2 million barrels per day, which is 4.9% above the same four-week period last year.
Prices initially dropped on the news of a smaller than expected draw in crude oil inventories but quickly stalled and returned almost to the same levels prior to the release before drifting off lower again.
Whilst there is still no sign yet of significant drawdowns in the US crude stocks, I can’t help feeling there is some overall sense of value at these levels that may well support the market at least until the OPEC talks in Vienna at the end of the month. We are very close the lows that were reached in March after the initial rally at the start of the OPEC cuts. Will these lows hold again or are there grounds for even lower prices. The charts are naturally still very negative across the board and there is no rush to buy into this, on the contrary, there is still a serious vulnerability for further drops from here in the near term. This is surely not yet the time to try and pick the lows unless one is looking at a much longer timeframe towards the year-end and beyond.
In the longer term there is still an expected pick-up in demand globally and an estimated deficiency in supply due to the present lack of investment in new conventional drillings and exploration, both of which have a considerable lag time before they become productive. US shale alone is not the answer to these future imbalances.
I have been trading from the short side so far, but I am now becoming a bit dubious about the possible additional potential on the downside from here…The Daily chart is still very negative but we are close to those earlier lows here and that makes me cautious of the risk of a quick rebound from somewhere around these lower $47 levels (WTI), but on the other hand…