September Crude Oil broke down during the overnight session trading down to 42.08 as traders pressed price lower on follow through selling off of the API report from Tuesday afternoon. Saudi Arabia also announced it produced a record 10.67 million bpd in July to meet domestic demand. Crude was able find support here and rallied to 43.11 in front of the EIA Report. When the report came out Crude Oil first dropped to 42.71 and then took off and made a new high for the day at 43.39. The EIA report showed Crude Oil inventories increasing by 1.05 million barrels. Traders were looking for a drawdown of 1.5 million barrels. Cushing, Oklahoma inventories rose by 1.16 million barrels as traders were looking for a decline of 1.3 million barrels.
Gasoline inventories were the surprise of the report with a drawdown of 2.8 million barrels, a much larger drawdown than the 1.3 million barrels traders were looking for. I think this was the reason for the new high. We also saw US production dip down by 15,000 bpd to 8.445 million bpd. Distillates had an increase of 1.15 million barrels. I think the weight of the increases in Cushing and overall inventories plus traders are coming to the conclusion the gasoline declines are mostly from gasoline being moved from one place to another, not used just not counted led to the rejection of the high.
Plus, gasoline inventories are still much higher than at this time last year. The rejection of the high sent Crude Oil below the overnight low to 41.64 before settling at 41.71. Crude oil continued lower after settlement, making the low for the day at 41.42 and it ended the day at 41.49. The collapse in Crude Oil took price below the 13 DMA (41.69) by the end of the day and sets up the 200 DMA (40.70) as the next target for bears to overcome.
High 43.39
Low 41.42
Last 41.49
Daily Pivot Points for 8/11/16
R2 44.07
R1 42.78
PIVOT 42.10
S1 40.81
S2 40.13