Crude oil price climbed higher yesterday after the American Petroleum Institute reported huge decline in crude inventory last week. The benchmark contract added +0.3% to close 79.14. In Asian session today, price continues to edge higher but upside momentum decreases as price moves closer to 80.

According to the industry-sponsored API, crude oil inventory drew -4.37 mmb to 333.1 mmb in the week ended November 13. The decline was significantly more market expectation of a drop of -2.2 mmb because attack of Hurricane Ida during the week caused shutdown of 43% of oil production facilities in the Gulf of Mexico. Gasoline stockpile was down -0.93 mmb, compared with consensus of -0.5 mmb, to 210.5 mmb as imports reduced. The disappointment came again from distillate stockpile which rose -0.51 mmb during the week as imports increased while demand slid.

The US Energy Department will deliver its weekly report in US session today. Crude inventory probably climbed +0.3 mmb. Gasoline and distillate stockpiles are anticipated to have dropped -0.025 mmb and -0.85 mmb, respectively.

Speculations on central bank buying and weakness in USD continue to drive investor crazy for gold. After mild consolidation Tuesday (closed at 1139.4, +0%), the yellow metal extends to a fresh record high at 1144.7 in Asian morning today.

The IMF's sales of gold to the Reserve Bank of India and the central bank of Mauritius signaled more central banks will step up gold purchases. This phenomenon is positive for gold.

USD recovered modestly against major currencies as stock markets eased after US' inflation, industrial production and housing data missed expectations. The dollar index gained +0.6% yesterday. The US Labor Department reported that PPI rose +0.3% mom while core PPI contracted -0.6% mom in October. Both readings were weaker than market expectations. Industrial production grew +0.1% mom in October while the market had anticipated a +0.4% increase. Worse still, September's reading was revised down to +0.6%. NAHB housing market index stayed flat at 17 in November, contrary to consensus of an improvement to 19.

If economic data in the US continue to be disappointing, this should lead to weakness in USD in the long-term. Subdued inflationary pressure will allow the Fed to maintain its accommodative monetary policy for a long time.

Weekly change in inventory as of 13/11/09 ChangeMarket Expectation Previous
Crude oil  +0.30 mmb+1.76 mmb
Gasoline  -0.025 mmb+2.56 mmb
Distillate  -0.85 mmb+0.35 mmb

Comparison between API and EIA reports:

API (Nov 13)

EIA (Nov 13 )

Forecast (using API's inventory level)Inventory
Crude oil-4.37 mmb333.1mmb+1.22 mmb
-4.68 mmb333 mmb
Gasoline-0.96 mmb210.5 mmb+1.40 mmb
-0.34 mmb210.5 mmb
Distillate+0.51 mmb169.3 mmb+0.64 mmb
+1.28 mmb169 mmb

API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department (EIA)for its weekly survey.  Oil inventories from the API and EIA moved in the same direction for over 70% of the time, using data in the past 4 years.  

Source: Bloomberg, API, EIA