DOE (Department of Energy) Weekly Oil Inventory Actual 5.6m, Expected 2m, Previous 1.7m
Release Explanation: The release tracks changes in crude oil production, refinery inputs and utilization, production by product, current inventory level of crude and related products as well as an estimate of how many days of supply is currently available.
”Increasing or decreasing inventory figures leads to an adjustment of price action that in time will spread throughout the economy TheLFB-Forex.com Trade Team members said. Currently, it is estimated that for every one percent of GDP growth, oil consumption increases by one quarter to one third of a percent, so oil inventories must be able to increase along with the economy or another gasoline shortage may occur. It is also worth noting that at an average price of $75.00 a barrel, the U.S. spends one billion dollars a day on crude.”
Trade Desk Thoughts: Crude oil price is on the same level as interest rates when it comes to its impact on the economy. It affects every release. The product is responsible for much of our trade deficit, it is used throughout the product/service cycle, and also has a significant impact on consumer spending as well as inflation. This release was off the charts in regard to inventory levels, which will impact crude prices negatively, and also cast a doubt that consumers may not be in a position to draw on those inventories said TheLFB team.
Currency Impact: The initial affect on the U.S. dollar tends to be the inverse of oil prices. For example, higher oil price leads the greenback lower since it suggests higher trade deficits and a possible decrease on consumer spending. However, the real impact of oil prices (and inventory levels) is felt farther down the road as prices influence headline and core inflation the team said. The impact was on Usd/Jpy that followed equities lower, and in a strengthening of the dollar against the cad and aussie commodity pairs.