Oil Prices Tumble Despite Inventory Draw

After last week’s surprising inventory build, the latest US Energy Information Administration report underlined a resumption in the decline of oil stockpiles.  Crude inventories dipped by 1.661 million barrels, missing expectations of a 2.739 million barrel drawdown. However, apart from the headline figure, the real fireworks transpired after the report highlighted a 2.096 million barrel increase in gasoline stockpiles for the week ending June 9^th.

The surprise build-up was the latest sign of persistently weak demand even as the summer driving season enters its peak. The four-week average gas consumption is currently -1.20% below the year-earlier level. In addition, US Sentiment was hurt further after the International Energy Agency suggested that growing US output will lead to supply growth surpassing demand growth in 2018. After breaking below $45.00 a barrel, WTI’s next stop could be $42.00, a level not seen since the middle of November.

Data released by Eurostat on Wednesday indicated that Euro Area job gains accelerated during the first quarter to the fastest annualized pace of growth since before the 2008 financial crisis.  Employment in the common currency bloc grew by 1.50% on the year. In absolute terms, 154.8 million people were employed during the first three months of the year, the highest number ever recorded.

The European Union’s statistics office also revised its figures for the fourth quarter to an annualized rate of 1.40%. This development will be welcomed by the European Central Bank as it considers a gradual tapering of accommodative policies after years of battling high unemployment.  In a separate release, Eurostat reported year-on-year industrial output growth of 1.40% in April, slightly higher than forecasts of a 1.30% rise.  CAC September futures are sitting close to the strong support around 5220 after falling most of Wednesday’s session.