Oil off the lows after mixed EIA inventory report

The EIA crude oil inventory report came close to matching the API report, also more than doubling the high end of the economists’ forecast range.  The build of 9.3 million barrels of crude initially saw oil prices spike lower towards the session lows but has now quickly erased most of today’s earlier decline. 

It seems Brexit and trade war optimism, along with a decent start to earnings season is alleviating some demand growth concerns and helping traders ignore the bearish headline surge with stockpiles.  Crude production stayed at the record high of 12.6 million barrels for a second consecutive week.  The report was not completely bearish as both refinery maintenance accelerated some output and as fuel supplies declined, bringing down the overall petroleum inventories. 

Some of this huge build was expected as refiners get ready for the IMO rules that kick in at the start of the year.  The coming weeks could see a drop in production as we enter a key maintenance period for refiners. 

Technical traders are starting to turn bullish on West Texas Intermediate crude as it has started to make higher lows and appears to have major support around the $52 a barrel level.  If we see more constructive comments leading up to next month’s Xi-Trump meeting at the APEC summit, we could see WTI make a run to the $57.00 region. 

The Canadian dollar also extended its gains against the greenback after oil pared some of its earlier losses.  USD/CAD is now at the lowest level since July 31st and could be on the verge of breaking out even further.