Crude oil inventories
According to the EIA’s (Energy Information Administration) report on February 22, 2017, US crude oil inventories rose 0.56 MMbbls (million barrels) in the week ended February 17, 2017, as compared to the expected rise of 3.5 MMbbls and a rise of 9.5 MMbbls the previous week.
On February 22, 2017, the United States Oil Fund (USO) fell 1.5%, and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) fell 3.1% after the announcement of the latest crude oil (USL) (BNO) (DBO) inventories report. Crude oil prices generally react positively to any fall in inventory levels. The rise in inventories indicates that the supply glut position in the market is increasing, which adds more uncertainty to the movement of crude oil prices.
Crude oil inventories rose marginally and were below market expectations. However, in the last two weeks, huge inventories have built up. Investors were concerned that the rising inventories could lead to a supply glut position.
The OPEC (Organization of the Petroleum Exporting Countries) members and other producers agreed to a production cut deal in November. Since then we have seen a huge positive movement in crude oil prices. ANZ analyst commented, “However, it was the lowest increase over the past couple of months. If this trend of lower imports and smaller gains in inventories persists over the coming weeks, it would suggest that the OPEC-led production cuts are starting to have an impact.”
In the next part, let’s look at the Eurozone consumer confidence in February 2017.