Crude Finishes Higher But Driven Down By Unexpected US Stock Build

Oil prices ended the day higher despite a sharp drop following EIA data showing a significant US crude inventory build. Prices rose moderately following lower-than-expected US CPI data but fell on the FOMC announcement and upward revision to the 1-year rate forecast. Benchmarks are higher this week. The USD index fell 0.2%.

• WTI rose 0.5% to finish at $78.32/bbl and it has started today’s trading around $78.33. It reached a high of $79.32, breaking resistance at $78.36, before falling to $77.88 following the EIA data. The benchmark is now up 3.7% this week to be 1.7% higher in June. Short-term resistance is at $80.62, May 1 high, and a break of this level would cancel the bear theme. Initial support is at $75.33, June 10 low.
• Brent is up 0.7% to $82.52/bbl after a high of $83.34. It fell to $82 after the inventory data. Despite rising 3.6% this week, the trend condition remains bearish and the gains are considered corrective. Key short-term resistance is at $84.72, May 29 high. Initial support is at $79.32, June 7 low.
• The EIA reported a 3.73mn barrel crude stock build in the US while a draw of around 1.5mn had been expected. The discrepancy was due to the strongest rise in oil imports since 2018. Gasoline inventories rose 2.57mn and distillate 881k. Refining utilisation eased 0.4pp to 95%.
• The IEA revised down its demand expectations for 2024 by 100kbd with 2025 seeing a slight improvement, which also weighed on crude. This was in contrast to OPEC expectations of an increase in demand in H2 2024 driven by China. Differences between the IEA and OPEC are not unusual.