U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher early Wednesday following an industry report that showed U.S. stockpiles fell more than expected last week.
The move is helping the market erase some of Tuesday’s losses that were fueled by speculation of sanctions-hit Iranian crude returning to the market following U.S. President’s move to fire national security adviser John Bolton, a noted Iran policy hawk.
American Petroleum Institute Weekly Inventories Report
The API report Tuesday afternoon a large crude oil draw of 7.227 million barrels for the week-ending September 5. Analysts were looking for a 2.6 million barrel draw. The net draw for the year is 25.90 million barrels for the 37-week reporting period so far this year.
The API also reported a large draw of 4.460 million barrels of gasoline for the week-ending September 5. Analysts were looking for a draw of 900,000 barrels for the week. Distillate inventories rose by 618,000 barrels for the week, while inventories at the Cushing, Oklahoma futures hub fell by 1.359 million barrels.
Markets Post Dramatic Downside Reversal on Tuesday
WTI and Brent crude oil opened the session higher on Tuesday on follow-through buying related to the appointment of Prince Abdulaziz bin Salman as Saudi Arabia’s new energy minister. On Sunday, he said the kingdom’s oil policy would not change and a deal with other producers to cut output by a combined 1.2 million barrels per day would be maintained.
The markets made a dramatic break from their highs and finished lower on the news that President Trump had fired John Bolton, on fresh fears that Iran and the United States may overcome their differences, leading to the eventual release of Iranian crude oil for export.
Yesterday’s sell-off may have been a little overdone since there is no proof that tensions have even eased enough between the United States and Iran to consider the lifting of sanctions against the rogue nation. This could become a factor down the road.
The focus now shifts to today’s U.S. Energy Information Administration (EIA) weekly storage report due to be released at 14:30 GMT. It is expected to show a 2.6 million barrel draw. However, given the larger-than-expected API draw, the government report may actually show a bigger draw. This could drive prices higher.
In other potentially bullish news, Iraq said it will immediately comply with OPEC production cuts after months of overproduction, its oil minister told CNBC on Tuesday.
This article was originally posted on FX Empire
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