US Crude Oil Stockpiles Rose: Will Crude Oil Lose More Ground?



US crude oil stockpiles rose

US crude oil stockpiles rose by 6.6 MMbbls (million barrels) in the week ending April 8, 2016—compared to the fall of 4.9 MMbbls in the prior week ending April 1, 2016, according to the EIA (U.S. Energy Information Administration). It was above Market expectations of a rise by 2.6 MMbbls. The rise in the US (QQQ) (SPY) (VOO) crude oil (USO) (UWTI) inventory indicates that the supply increased for the week ending April 8, 2016. However, crude oil only fell 1.4% on April 13 after the declaration of the crude oil inventory data. Investors’ focus shifted towards the Doha meeting.

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Doha meeting is fruitless

The meeting of OPEC (Organization of Petroleum Exporting Countries) and non-OPEC producers took place in Doha on April 17. It didn’t achieve its objective. Saudi Arabia reiterated that all the OPEC countries including Iran must agree to the deal. Since February 11, the production freeze talk was an important catalyst for the crude rally. On February 11, US crude oil was at multiyear lows.

Why a production freeze might not be possible

Saudi Arabia is OPEC’s leading producer. It’s constantly insisting that Iran must join the production freeze deal. However, Iran isn’t ready to join the production freeze talk until its pre-sanction crude output level of 4 million barrels per day is achieved. Until Iran achieves its required crude output level, the production freeze talk might fail.

In the next part of this series, we’ll analyze the performance of China’s gross domestic product growth rate for the first quarter.


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