As of Thursday morning, crude oil traders are digesting a wealth of market developments in the crude oil market as well as outside markets. The weekly EIA report was delayed a day due to the services for former President George H.W. Bush yesterday, and showed a draw in crude inventories of 7.3 million barrels, far in excess of estimates and again in contrast to the previous API number.
Other factors for the crude oil market include the OPEC meetings in Vienna and possibility of a change in output quotas for the year ahead and possibility of a lack thereof. There are also the slides in equity indices, which many attribute to trade fears, not aided by the arrest of Chinese executive and yield curve inversions.
While some could have considered the draw in EIA to be bullish, the market has certainly not reacted that way. There could be anticipation of the market to break below $50 per barrel but the market has yet again held that level, up to this point. Recall that the drop in January crude oil from the October 3rd high of $76.55 to the November 23rd low of $49.41 is over 35.45%.
Until there is further word from Vienna and Beijing the market could be “held hostage or supported” such as other markets included in the recent G20 announcement (as noted in RJO Market Insights) such as soybeans. Note the support of the last 3 weeks at the $50 level pictured below.
Crude Oil Jan ’19 Daily Chart