Every Wednesday we hear about API crude oil inventory, but to me its still confusing Ex-
Crude oil inventories rose by 3.53 barrels last week to 340.6 million
Gasoline inventories increased by 1.87 million barrels to 230.9 million, the report showed. or Sometime it is like “Inventory is Oil positive”.
If inventory increases or if it is oil positive that means Demand is increasing or vice versa ?
Thanks.
Even if you’ve got a news trading strategy, this news announcement is hardly worth concerning about, I can’t remember it having hardly any impact at all.
If inventory is increasing this means that the U.S. is using less oil than perhaps anticipated and less demand can equate to a lower price of oil. If inventory is decreasing it’s the opposite (all other things being equal).
The price of oil has a significant impact on U.S. GDP, consumer spending and commercial activity. Every $1 per barrel rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year. Start adding a few dollar increases together and those numbers become pretty significant fairly quickly. In Q4 2010 oil went up $20 - that’s not pocket change.
I’m not sure if the number would have an immediate effect on forex news but it definitely can affect the price of oil and that can have knock-on effects in forex at some point down the line. Depending on how you trade this might be something you want to keep an eye on or something you can completely discount altogether.