Crude Drops Sharply On Large US Stock Build But Product Destocking

Oil prices fell sharply on Wednesday due to a large US inventory build of 12.018mn barrels. Before the data was released prices had been trending higher. The weaker greenback was unable to provide support once crude began to fall (USD index -0.2%).

• WTI is down 1.7% to $76.56/bbl and has started today slightly higher at $76.64. It rose to a high of $78.77 before the EIA release, approaching resistance at $79.29, but then fell to a low of $76.38 following it. Initial support is at $74.88, 50-day EMA.
• Brent fell 1.6% to $81.48/bbl, close to the intraday low of $81.39, after a high of $83.60 before the data. Key short-term resistance is at $84.17 and initial support at $79.69, 50-day EMA.
• The EIA reported a larger-than-expected 12.02mn barrel inventory build in the US but with refining capacity dropping 1.8pp to 80.6% gasoline stocks fell 3.66mn and distillate -1.92mn. The product destocking provided some support to prices. US inventories have been volatile after freezing weather impacted flows and refining.
• Four-week jet fuel usage rose to pre-Covid seasonal highs in the US, according to the EIA.
• Market signals, such as timespreads and fuel margins, are implying tighter supply, according to Bloomberg. The IEA monthly report with supply and demand projections is published today.