Today, at 10:54 AM ET, WTI crude oil prices were up 0.6% from their last closing level. At 10:30 AM ET, the EIA (US Energy Information Administration) reported its Weekly Petroleum Status Report for the week ended November 1.
Based on the report, crude oil inventories rose by 7.9 MMbbls (million barrels). A Reuters poll suggested a rise of 1.51 MMbbls. Also, gasoline inventories declined by 2.8 MMbbls, versus Reuters’ forecast for a decline of 1.8 MMbbls.
The bigger-than-expected fall in gasoline inventories might have supported oil prices. But how long can that last?
Most importantly, the difference between US crude oil inventories and their five-year average widened to 3%. A week ago, this difference (the inventories spread) was at 1%. And this expansion in the inventories spread might limit crude oil prices’ upside up to November 14.
On November 14, the EIA will report inventory data for the week ended November 9. To learn more, check out Rising Inventories Spread Might Drag Oil Prices.
A possible downturn in crude oil prices could impact Chesapeake Energy (CHK). In today’s trading session, CHK’s share prices have lost 21%. The recent Chesapeake earnings disappointment could be behind this decline.
API inventory data
Yesterday, the API (American Petroleum Institute) reported inventory data for the week ended November 1. A Reuters poll suggested a rise of 2.25 MMbbls in API crude oil inventories figures. However, the API reported a rise of 4.25 MMbbls. However, the API also reported a fall of 4.17 MMbbls in gasoline inventories.
This decline was more than double Reuters’s estimated fall. Reuters had forecast a decline of 2 MMbbls in API gasoline inventories. So we’re seeing a similar trend to the EIA data.
OPEC lowered demand outlook
On November 5, OPEC released its WOO (World Oil Outlook) report. The report says, “Non-OPEC total liquids supply is projected to grow by 9.9 mb/d (million barrels per day) between 2018 and 2024, reaching 72.2 mb/d.” US shale oil’s share will be over 60% in non-OPEC supplies’ rise up to 2024, based on the report.
The report also highlights that in 2019, global oil demand growth is expected at 1.1 mb/d. However, this demand growth should fall to 0.9 mb/d in 2024.
This contraction in demand growth, plus rising non-OPEC supplies, could impact Middle-Eastern oil producers’ market share. In fact, I think Saudi Arabia’s stake sale in Aramco aligns with these new dynamics in the oil market. To learn more, see Aramco IPO: Will Crude Oil Prices Keep Declining?
Crude oil prices’ moving averages
On November 1, US crude oil active futures moved above their 20-DMA (day moving average). The 20-DMA at $55.91 is an important support zone for oil prices in today’s trading session.
Moreover, at 11:37 AM ET, US crude oil active futures fell below their 50- DMA. The 50-DMA could turn into a critical resistance zone this week. Crude oil prices are 4.1% and 2.7% above their 100- and 200-DMAs.