Bearish Breakout in Crude Oil Explained! - Forex News by FX Leaders

Bearish Breakout in Crude Oil Explained!

Posted Thursday, August 17, 2017 by
Arslan Butt • 1 min read

During the Asian sessions, the crude oil continued to trade bearish. This is despite the fact that the EIA report showed a draw of 8.95 million barrels though it had been expected to be bullish. What's going on?

EIA Stockpiles Report 

According to the Energy Information Administration (EIA) report, there was a draw of 8.95 million barrels for last week followed by a draw of 6.45 million barrels. The oil was supposed to gain based on the news, but it surprisingly fell to break below the bullish trend line.

API Stockpiles Report

In my previous update on crude oil, I mentioned the API report. As per the American Petroleum Institute report, the U.S. crude stocks dropped by 9.2 million barrels in the week 469.2 million. As we know, there is a correlation between API report and EIA report. This caused investors to continue to buy the crude oil before the actual release of EIA inventory data.

Priced In Market

Upon the release of EIA inventories, the prices fell sharply as the EIA inventories showed reported a drop of 8.95 million, less than 9.2 million. Thus, the "priced In" oil reversed its earlier gains.

For now, investors are advised to wait for the U.S. session because we have several economic events from the United State, which may impact the crude oil demand.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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