The EIA released the weekly inventory report this morning at 9:30am, and it was remarkably bearish. The numbers were as follows:
Crude oil build +2.84 million barrels, expected up 1.5 million
Gasoline build +6.8 million barrels, expected up 900K
Distillates build +.08 million barrels, expected down 560K
Existing stocks are at their highest level at this time of year over the preceding 5 yrs.
The knee-jerk reaction on the release of the report was an immediate sell off. However, buyers just as quickly swept in to buy oil and gas off their lows. By the end of the day’s session, oil and gas have drifted near their post inventory release lows. The back and forth the energy markets have been experiencing over the last month, is a tug of war between what looks like bearish supply growth, and bullish production cuts by OPEC nations. For now crude has maintained its post OPEC announcement rally to the $52-$56 area. A breakout is bound to happen depending on which narrative grabs control of the market. Although, the supply side makes a compelling case for lower prices, I believe that OPEC cuts will ultimately drive prices toward the $60 mark. Many large banks are calling for $50-$60 range in crude for the year.
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Senior Market Strategist
After earning a degree in political science and philosophy at Loyola University, Tarik put his education to work by taking a job as a runner on the floor of the Chicago Board of Trade. His initial exposure to futures began in the grain room, where he ran orders from the order desk to the brokers in the pit. Surviving the dog eat dog world of the pits he then went to the phones as a clerk, interacting with clients on a daily basis. Within the year he was hired at Shatkin, Arbor, Karlov as an arb clerk in the bond room. There he thrived on the fast pace and pressure filled environment of the floor and was rapidly promoted to Bond desk manager for SAK, staying in that role from 1996-2003. He became a member of the CBOT in 2000 and was a member for more than 5 years, honing his skills while working with some of the most successful traders in the business. Tarik has traded independently as well as proprietorially since 2000: focusing on treasury bonds, metals, grains and crude oil. He also has experience with various option strategies on the buy, as well as the sell side. Tarik does his utmost to represent his clients with the knowledge and experience that he has built.