NewsEIA Report
Previous1.9 Million Barrels
Forecast1.0 Million Barrels
AnalysisCrude oil prices were stable with the start of the European session this morning ahead of the US supply data, while the jitters eased in the market with rebounding equities which eased the selloff on crude.

Crude prices rose as much as 0.7% to strike the highest of $106.94 per barrel and now trading almost flat around $106.29 off lows of $105.35 per barrel. The market was supported by the rebound in equities as investors woes over the prevailing uncertainty eased with the expected positive data especially with expected rise in European industrial production and US retail sales.

We also saw some support from Libyan continued tension which triggered oil’s gains in the early trading hours. The rebels said that the Qaddafi forces have intensified fighting and asked for international help which offset signs of calm on the back of the proposed cease-fire.

The contracts yesterday slumped strongly almost 3.3% to settle at $106.25 as the IEA projected slowing demand on crude will slow for now amid tension and unrest alongside high prices, while Goldman Sachs advised investors to lock on profits which worsened the selloff.

We can see signs of stability this morning ahead of the EIA weekly inventory status report from the US. Yesterday the API reported a sharp fall in gasoline inventories by 4.6 million barrels which is the center of focus now with the approaching driving season.

The EIA report today is expected to show 1.0 million barrels buildup in crude inventories, yet the upbeat sentiment is from the expected drop of 1.0 million barrels in gasoline inventories.  

The volatility is expected to remain high and the correction for crude is likely to extend for now and the stability for now is merely a retest. Crude is stable below $107.10 and technically that is the supporting bearish pressure for crude to continue the correction.

The focus will be on the US retail sales and inventory data amid eyes on the conflict in Libya and only a drastic change in the underlying conditions will be able to take crude higher again with a daily closing above $108 per barrels at least to continue the upside move over the interim.