The price of Crude oil fell sharply on the back of the latest EIA weekly US oil inventory report . The latest data showed that stockpiles increased by more than 14 million barrels over the past week. This is against prior estimates of a 1 million barrel increase.
The latest figures were the largest weekly build up of oil inventories in 34 years. The supply data reduced expectations that a recent oversupply in the market is coming to an end. Gains were largely attributed to increased imports. However an increase in production from 8522k (8504k prior) and a decline in refining runs also contributed to the increase.
Prior to the latest release, stockpiles had been seen to fall. The latest inventory therefore has reignited fears that current oversupply in the market has not yet come to an end.
Crude futures closed the day at $45.34, down 2.85% on the day. Today’s fall was another retreat from the markets attempt to push the price through the psychological $50 per barrel.
The Energy Information Administration’s (EIA) Crude Oil Inventories show the weekly change in the number of barrels of crude oil that are held by US firms. A high number indicates a build up of stock and therefore lower consumption. This is bearish for crude prices. Conversely a number that sees the inventory figures drop is bullish for the price of crude.
The EIA report has gained more importance recently on the back of global growth concerns and anticipated OPEC supply cuts. Members from the Organization of the Petroleum Exporting Countries are still yet to agree if a cut in production should take place this year. Furthermore there is no indication what the level of these cuts would be. The latest report in the current economic climate is seen as very bearish for oil traders.
The latest figures saw USD/CAD spike higher on the announcement of the news. The commodity currency is a key mover on the price of oil.
The currency pair surged above the 100 day moving average to post a high of 1.3429 before moving back later in the session.