EIA Reports Further Inventories Build
Crude oil prices have remained under pressure this week in response to the latest data from the Energy Information Administration.
The data showed a further rise in US crude stores. The report covering the week ending March 6th showed that US crude stores jumped by 7.7 million barrels.
This latest inventory increase came above the expected 2.3 million barrel increase and casts further concern over the global oil demand environment.
However, the report was not totally bearish. The EIA reported a 5 million barrel drop in gasoline inventories, outstripping expectations of a 2.5 million barrel drop. Distillate stockpiles were also lower by 6.4 million barrels, versus an expected drop of 1.9 million barrels.
EIA Slashes Demand Outlook
Along with the latest build in US crude stores, the EIA has also slashed its global oil demand projections.
The administration now forecasts global oil demand to decrease by 910k barrels per day over Q1 and by 6660k barrels per day over the year.
The EIA cited the global impact of the ongoing coronavirus outbreak which is threatening to push the global economy into a recession. In the US, forecasts indicate that demand will fall by 350k barrels per day over Q1, a further reduction from the prior 260k barrel per day forecast.
Russia & Saudi Arabia Clash
Crude prices have also come under pressure from the tensions between Russia and Saudi Arabia over crude production levels.
Russia refused to join OPEC in increasing its oil production cuts. In response, Saudi Arabia announced that it will now massively increase its oil production in a bid to force Russia to agree to step up production cuts or risk a further collapse in oil prices.
This latest development highlights the growing concern around the fall in oil prices. Crude prices are now down by nearly 50% since the start of the year.
The technical picture in Crude at the moment is currently best viewed on the higher timeframes where you can clearly see the extent of the collapse in prices this year.
Following the gap lower at the start of the week, price traded as low as 27.41, just ahead of testing the 26.21 2016 lows. Price has so far recovered to 33.19 last. However, while price remains below the 42.40 broken support, further downside looks likely.