WTI Crude Oil Inventories Are Out – OPEC Meeting In Focus
Just a couple of minutes ago, the EIA (Energy Information Administration) released the crude oil inventory data, which showed a draw of 4.43 million barrels in the previous week. However, the draw was not in line with the expectation 2.4 million barrels.
Logically, the news was supposed to make crude oil bullish, but the oil consolidated in a narrow range. At first, the prices plunged, but failed to break above the major resistance level of $51.80 and fell to trade near $50.30. Yup, the market actually reversed its earlier gains after the news.
Why Crude Oil Prices Reversed On Bullish News?
Let's recall my thoughts shared in our previous update entitled WTI Crude Oil – On Its Way To Fill Gaps. We discussed that the investors are "pricing in" the upcoming OPEC meeting, and expected to discuss extending the production cut.
Their idea is to reduce the oil supply in the market to accommodate falling oil prices. The drop in oil stockpiles generates a bullish sentiment for investors, which underpinned the falling oil prices.
However, the greater-than-expected draw in inventories is rendering a boosted demand for oil in the market. This hurts the sentiment in regards to OPEC members deciding whether or not to cut output in the light of consistent drops in inventories.
Now, all we need to do is to wait for the OPEC meeting tomorrow – let's see if they decide to extend the production cuts for another 9 months until March 2018.
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