Oil Market = Oct 2
Posted: Mon Oct 02, 2017 7:28 pm
Raymond James Energy Stat 10-2-2017
Better late than never: the market has finally begun to realize that U.S. inventory data is bullish.
The bullish sentiment behind both oil prices and energy stocks entering 2017 faded quickly as U.S. oil inventories surged in January
and February. Even though that abnormal inventory surge was clearly a function of the normal two month lag between OPEC cuts
being implemented and those cuts showing up in the U.S. oil stocks, it was enough to reverse sentiment to the bearish side. The
unusual thing (in our view) was that oil sentiment remained remarkably bearish for six months even as U.S. inventories posted
massive inventory reductions from early March through August. As shown in the graph below, total U.S. “big-3” oil inventories
(crude, gasoline, and distillate) have drawn down by ~650,000 bpd since early March. This is three to four times greater than even
our bullish oil model predicted and oil price sentiment was oblivious to the bullish inventory data! Even U.S. crude only inventories
have fallen by over 82 million Bbls since peaking in late March. Any way you look at it, this is a bullish shift in oil fundamentals over
a relatively short period of time. Sell on bad news, ignore the good news? Hard to win this game, right? Well, it finally feels like the
market has “figured out” that inventories data is genuinely bullish.
----------------------
There is strong resistance at $52. WTI needs several closes above $52 to move higher. BIG DRAWS from crude oil storage this month should do it.
Better late than never: the market has finally begun to realize that U.S. inventory data is bullish.
The bullish sentiment behind both oil prices and energy stocks entering 2017 faded quickly as U.S. oil inventories surged in January
and February. Even though that abnormal inventory surge was clearly a function of the normal two month lag between OPEC cuts
being implemented and those cuts showing up in the U.S. oil stocks, it was enough to reverse sentiment to the bearish side. The
unusual thing (in our view) was that oil sentiment remained remarkably bearish for six months even as U.S. inventories posted
massive inventory reductions from early March through August. As shown in the graph below, total U.S. “big-3” oil inventories
(crude, gasoline, and distillate) have drawn down by ~650,000 bpd since early March. This is three to four times greater than even
our bullish oil model predicted and oil price sentiment was oblivious to the bullish inventory data! Even U.S. crude only inventories
have fallen by over 82 million Bbls since peaking in late March. Any way you look at it, this is a bullish shift in oil fundamentals over
a relatively short period of time. Sell on bad news, ignore the good news? Hard to win this game, right? Well, it finally feels like the
market has “figured out” that inventories data is genuinely bullish.
----------------------
There is strong resistance at $52. WTI needs several closes above $52 to move higher. BIG DRAWS from crude oil storage this month should do it.